Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

HERIOT-WATT COLLEGE ORDER CONFIRMATION BILL

Read the Third time and passed.

Oral Answers to Questions — NATIONAL FINANCE

Sterling Area (Transactions)

Mr. Shepherd: asked the Chancellor of the Exchequer what was the liability incurred by the United Kingdom as sterling area bankers for the rest of the sterling area over the past five years in respect of the rest of the sterling area's trade with the non-sterling area; and what information he has as to how these balances were settled.

The Chancellor of the Exchequer (Mr. James Callaghan): I apologise for the length of this Answer, Mr. Speaker, but I promise that it is not possible to give the information required more shortly.
The published balance of payments figures show that the overseas sterling area's surplus on all transactions with non-sterling countries resulted in transfers to the United Kingdom estimated at about £440 million over the years 1960–64. Other things being equal, this would have led to a corresponding increase in United Kingdom liabilities to the overseas sterling area and thus in their assets in the United Kingdom. But, in fact, the greater part of this increase in assets was used as it took place to meet the area's deficit with the United Kingdom.

Canada (Balance of Trade)

Mr. Shepherd: asked the Chancellor of the Exchequer what estimate he has made of the gold and dollar liability

which Great Britain has incurred in respect of her adverse balance of trade with Canada over the past five years.

Mr. Callaghan: The adverse balance of visible trade between the United Kingdom and Canada in the period 1960–64 amounted to £768 million. The hon. Member will, of course, realise that visible trade is only one element in our transactions with Canada.

Mr. Shepherd: Does not the right hon. Gentleman realise that this is a most serious deficit and that there are still impediments to our trade with Canada? Would he say what steps he is taking to reduce this serious drain on our resources?

Mr. Callaghan: Yes, I agree. A number of efforts are being made, including visits by a number of commercial counsellors and attachés in Canada to this country under the general name of "Canextour". They have been visiting hundreds of firms here to make them more interested in exporting to Canada.

Currency (Decimal System)

Captain W. Elliot: asked the Chancellor of the Exchequer if he has now fixed a date for the decimalisation of the currency; and if he will make a statement.

Mr. Sharples: asked the Chancellor of the Exchequer whether he will now make a statement on Her Majesty's Government's policy in relation to the introduction of decimal currency.

Mr. Callaghan: I regret that I cannot add to what my hon. and learned Friend the Financial Secretary said on 22nd June.

Captain Elliot: Is the right hon. Gentleman aware that I quite appreciate the difficulties in this matter, but would he consider whether he can decide the system which is to be adopted, if it is to be adopted, and publish that? If he does, it will be of great help to business.

Mr. Callaghan: I think that there is a lot in that point. We hope to derive some benefit from the Australian experience. I am hoping to send one or two Treasury officials to Australia when they introduce the system, because there are


a number of lessons in what they have done from which we can learn. I will certainly consider the suggestion.

History of Parliament

Mr. Frank Allaun: asked the Chancellor of the Exchequer how much the Government have so far contributed to the History of Parliament; how much more it expects to contribute before completion; and how many more years he anticipates it will take to finish the History.

The Chief Secretary to the Treasury (Mr. John Diamond): So far, just over £250,000. I am reviewing with the trustees the scope of the remaining work, its timing and cost.

Mr. Allaun: Is not that a staggering sum of public money to spend on what eminent historians have described as "a Westminster white elephant", "a masquerade", "a purely biographical dictionary", and "a record of the insignificant"? Will my right hon. Friend consider whether it is worth proceeding with the remaining volumes, since so far it has cost us this sum and taken 12 years to produce the first three volumes?

Mr. Diamond: I will, of course, consider my hon. Friend's representations. The amount so far promised, with all-party agreement, is approximately £360,000, but it is clear that that sum will be used up in producing less than half the planned amount of work.

National Savings Committee (Civil Servants)

Mr. Barnett: asked the Chancellor of the Exchequer how many civil servants are engaged full-time and part-time respectively, in assisting the chairman of the National Savings Committee; and what is the cost.

Mr. Diamond: 565 and 134 respectively, at 1st November, 1965. Their salaries will cost about £782,000 this year.

Mr. Barnett: Is my tight hon. Friend aware that many of us accept the need for increased savings to avoid increased taxation? Would not he agree that, with the greatest respect to Sir Miles Thomas, what is needed is a full-time appointment,

with a younger man engaged wholly on the task of increasing National Savings?

Mr. Diamond: The Government have every confidence in those who are acting, in an honorary and a paid capacity, in helping in this all-important task.

Mr. William Clark: Would not the Chief Secretary agree that one way of increasing National Savings would be to convince the small saver that he should have confidence in the Government?

Mr. Diamond: That consideration does not arise on this Question, but it is always present.

Civil Service Pensions (Unestablished Service)

Sir E. Ellington: asked the Chancellor of the Exchequer on what date he received the proposals from the staff side of the Civil Service National Whitley Council on the subject of the counting of unestablished service for pension purposes; what is the cause of the delay in reaching a decision; and if he will now make a statement thereon.

Mr. Diamond: My right hon. Friend received the proposals on 14th January. The staff side has now been informed of the Government's decision that in present circumstances they cannot give sufficient priority to the introduction of full reckoning to justify starting negotiations.

Sir E. Errington: Will the right hon. Gentleman say how much money is involved annually and whether reconsideration cannot be given to the matter in view of the fact that the question has been a live one for five or six years?

Mr. Diamond: The total amount involved is £310 million over a long period of years. In early years the annual cost would vary with the solution adopted, but it would never be less than several million pounds a year.

Hospital Building and National Health Service (National Lottery)

Mr. William Hamilton: asked the Chancellor of the Exchequer if he will initiate a national lottery as a means of financing the National Health Service, and especially hospital building.

Mr. Diamond: No, Sir.

Mr. Hamilton: Will my right hon. Friend give an assurance that his mind is not completely closed on this matter? Can he say how on earth we are to get all our hospitals modernised within a generation unless some such unorthodox policies are adopted? Would he not consider it preferable to gear the natural gambling instinct to a valuable social purpose such as that mentioned in the Question?

Mr. Diamond: Treasury minds are always very flexible, both upwards and downwards, but on balance we believe that the arguments, both financial and moral, are against the Government sponsoring lotteries.

Mr. George Y. Mackie: What is the difference between a straight-out lottery and the present system of Premium Savings Bonds, in which there is a lottery on the interest?

Mr. Diamond: The difference has been well explained—[HON. MEMBERS: "No."]—perhaps the hon. Member was not in the House at the time—by the right hon. Gentleman who introduced the scheme.

Balance of Payments

Mr. Peter Walker: asked the Chancellor of the Exchequer by what amount the measures that he has taken will benefit the balance of payments for the year 1965.

Mr. Callaghan: Although the full benefits of the Government's policies will not be felt in 1965, I nevertheless expect an improvement in our balance of payments of some hundreds of millions of pounds.

Mr. Walker: Will the Chancellor confirm that the estimate which he received from the Treasury on taking office of what would be the adverse balance of payments for 1965 if he did not take any measures was very similar to what the figures are likely to be?

Mr. Callaghan: I certainly would not confirm such a figure. The hon. Member will, I am sure, be glad to know that in the first 11 months of this year, including today's excellent export figures, our trade deficit has fallen to £296 million compared with £535 million last year.

Post-War Credits

Mr. Gower: asked the Chancellor of the Exchequer what plans he has for extending the categories of those entitled to early payment of post-war credits.

Mr. Callaghan: None at present.

Mr. Gower: While recognising that both sides of the House must feel a bit uneasy that thousands of people have been holding these bits of paper for nearly a quarter of a century, may I ask whether the right hon. Gentleman cannot consider enlarging slightly the existing categories to give hope to more people?

Mr. Callaghan: The hon. Member presses me in other connections to keep down expenditure. Now he is asking me if I cannot increase it. The answer is that I cannot do both at the same time.

Mr. Gower: asked the Chancellor of the Exchequer if he will take steps to enable all widows aged 40 years or more to receive repayment of their post-war credits.

Mr. Callaghan: Widows, irrespective of their age, are entitled to repayment of post-war credits which they hold in their own right.

Mortgage Payments (Income Tax Relief)

Mr. Hamling: asked the Chancellor of the Exchequer the estimated total of Income Tax allowances in respect of mortgage payments in the last financial year; and the estimated total for the current financial year.

Mr. Diamond: The estimated cost of tax relief on mortgage interest payments on domestic property in 1964–65 was £115 million and for 1965–66 is £130 million.

Mr. Hamling: Is my right hon. Friend aware that this sum compares very much with the amount paid out in Exchequer subsidies in respect of housing? Will he give more publicity to this to combat some of the propaganda from the other side?

Mr. Peter Walker: Will the right hon. Gentleman say how much of the increase is due to the increase in mortgage interest


rates this year and this week's announcement that in the first nine months of the year the cost of houses went up by a greater amount than at any other time since statistics were first kept?

Mr. Diamond: I cannot give the split of the figures, but the answer is that the increase is due partly to the estimated rise in total mortgage interest and partly to the rise in the standard rate last year from 7s. 9d. to 8s. 3d.

Investment Allowances

Mr. Bruce-Gardyne: asked the Chancellor of the Exchequer whether he will now announce the outcome of the Government's review of investment allowances.

Mr. Sheldon: asked the Chancellor of the Exchequer if he will make a statement on his review of investment incentives.

Mr. Callaghan: I am not yet in a position to do so.

Mr. Bruce-Gardyne: Would not the Chancellor agree that this review, like many other Government reviews, seems to be taking an inordinately long time? Can he give the House an assurance that when he decides upon new forms of investment allowances, he will not compensate the Treasury for this by raising the rate of Corporation Tax in next year's Budget?

Mr. Callaghan: I certainly would not give that assurance. It must follow from the estimates which I have already given concerning the rate of Corporation Tax that that rate is based upon allowances as they exist at present. That has been made clear on numerous occasions. In reply to the first part of the question, we have been hoping for discussions with the C.B.I., which have now started, and I do not think that there has been any delay in this matter.

Mr. Iain Macleod: Do we take it from the Chancellor's first answer that no announcement will be made before the Christmas Recess? If so, can he say that the announcement will be made in the House—that is, after the Recess and not during it?

Mr. Callaghan: We should like to make the announcement to the House, but, on the other hand, there is pressure

to make it as soon as possible. I could not give a definite answer, but if it is possible to make it in the House, we certainly will do so. But it will not be before Christmas.

Messrs. Carless, Capel and Leonard and Customs and Excise

Mr. Ridsdale: asked the Chancellor of the Exchequer if he will take steps to ensure that the proposed legislation to establish a Parliamentary Commissioner or Ombudsman is framed so that the class of matters such as the case of Messrs. Carless, Capel and Leonard against the Customs and Excise can be referred to that body.

Mr. Diamond: This legislation will be framed in accordance with the terms of the White Paper Cmnd. 2767.

Mr. Ridsdale: Why, for the sake of administrative convenience, is the Treasury compelling this small firm to make a forced loan of £350,000? It has taken a year to try to find a solution. Why cannot the Treasury find a solution to this problem?

Mr. Diamond: In the first place, I do not accept what the hon. Member has said. Secondly, there has been very full correspondence and my hon. and learned Friend the Financial Secretary has seen the hon. Member. Thirdly, it has nothing whatever to do with the Question.

Mr. Iain Macleod: May I ask the Chief Secretary to look personally into this case again? It seems clear from the information which has been made public—I am thinking of the City page of The Times a few days ago, which the right hon. Gentleman will have seen—that this is a matter which the Treasury and the Customs and Excise together could settle. Will the right hon. Gentleman look into this and see that this is done?

Mr. Diamond: Of course, I will look into anything that the right hon. Gentleman asks me to look at. I repeat, however, that my hon. and learned Friend the Financial Secretary has himself looked into the matter fully and carefully and that the report is not accurate.

Mr. Ridsdale: In view of the unsatisfactory nature of the Chief Secretary's reply, I propose to raise this matter on the Adjournment.

Distilleries, Moray and Nairn (Revenue Duty)

Mr. G. Campbell: asked the Chancellor of the Exchequer the amount of revenue collected in duties upon the products of distilleries in the joint County of Moray and Nairn and the County of Banff in 1964.

Mr. Diamond: I regret that the information is not available.

Mr. Campbell: Is the right hon. Gentleman aware that the estimate is a large figure? Considering the large proportion which s exported in addition, is the Chief Secretary aware of the major contribution of the industry in this area of Scotland? Has he, however, observed the trend so far this year, which will warn him that increasing the tax does not materially increase revenue?

Mr. Diamond: I take careful note, and so does my right hon. Friend, of all the points which the hon. Member has made.

Water Undertakings (Tax)

Mr. Mitchell: asked the Chancellor of the Exchequer the estimated additional revenue likely to come from water undertakings in the United Kingdom as a result of the Finance Acts, 1965.

Mr. Diamond: Assuming that the water companies maintain the level of their dividends, the best estimate I can make of the extra tax they will have to pay in 1966–67 is around £1 million.

Mr. Mitchell: Is the Chancellor aware that by his actions in the Budget he has substantially increased the cost to these undertakings, and that one in my constituency finds itself having to spend in excess of 17 per cent. of its rate revenue on this taxation alone?

Mr. Diamond: My right hon. Friend the Chancellor is aware of no such thing. What he is aware of is that he has acted as the Public Accounts Committee of this House asked him to act to remove an anomaly in cases such as this.

Nationalised Industries (Subsidies)

Mr. Bruce-Gardyne: asked the Chancellor of the Exchequer what is the estimated total cost to the

Exchequer of subsidies granted or promised to nationalised industries and other statutory bodies in lieu of price or fare increases or other charges to the consumer during the current financial year; and if he will indicate individually the value of all such subsidies.

Mr. Callaghan: London Transport has been promised a subsidy of £3·85 million. In addition, relief of part of the Coal Board's debt will cost the Exchequer about £600,000 this year in loss of interest.

Mr. Bruce-Gardyne: Would the right hon. Gentleman agree that these subsidies are a way of encouraging inflation rather than discouraging it because, while they peg prices, they do not peg wages and they increase the amount of money available to purchase other goods and services?

Mr. Callaghan: Some parts of the hon. Gentleman's statement are clearly true, but in the Government's financial policy there must always be a balance between subsidy and charging people the economic price. That principle has been followed consistently by successive Governments.

Mr. William Hamilton: Can my right hon. Friend say how the subsidy to London Transport conceivably fits in with the Government's policy of regional development, particularly in reference to development in areas like Scotland?

Mr. Callaghan: That illustrates my point, because in fact, as we have heard in relation to a previous Question, there is a limit beyond which fares cannot be increased at any one time without doing more harm than good. We may, therefore, be driven from time to time to the giving of a subsidy for the very best of economic and social reasons.

Mr. Lubbock: Is the right hon. Gentleman aware that if fare increases are imposed almost as an automatic annual measure, more and more people will be driven into bringing their cars into Central London, which is contrary to Government policy?

Mr. Callaghan: That is why I have always felt—and I hope that I have the support of the hon. Gentleman—that it is


far better to try to keep prices and incomes stable than to have automatic increases of both unrelated to productivity each year.

Capital Gains Tax

Mr. Stratton Mills: asked the Chancellor of the Exchequer whether he is aware that where an individual bought War Loan at £100 and died, and the holding was subsequently sold by his widow at a price higher than that at date of death or 6th April, 1965, she will have to pay Capital Gains Tax; and if he will introduce legislation to extend to widows the same basic valuation methods as would have been available to her spouse.

Mr. Diamond: My right hon. Friend is aware of the position but could not support the hon. Gentleman's proposal.

Mr. Stratton Mills: Is not this yet another anomaly which has been produced by the very unfair practice of extending the Capital Gains Tax to War Loan? Will the right hon. Gentleman specifically confirm that a husband and wife are grouped together for the purposes of Income Tax and for some parts of Capital Gains Tax, and will he look at this again to see if a compromise can be reached?

Mr. Diamond: I will look at it again, but not very hopefully.

Mr. Boyd-Carpenter: asked the Chancellor of the Exchequer whether it is his intention that the levy foreshadowed in Cmnd. 2771 shall exclude the imposition of short-term Capital Gains Tax on the realised development value on which it falls.

Mr. Diamond: No, Sir, but the amount of levy paid will be allowed as an expense for the purpose of the short-term gains tax.

Mr. Box: asked the Chancellor of the Exchequer whether investments held by the High Court in trust for widows and infants and subsequently transferred to a common investment fund to be controlled by the Public Trustee are to be liable to Capital Gains Tax, even though the original purchase price is higher than the price at which the investment is trans-

ferred from the High Court to the Public Trustee.

Mr. Diamond: Yes, as the law stands. But as the hon. Gentleman knows, my hon. and learned Friend the Financial Secretary has already promised to consider the matter.

Mr. Box: Is the right hon. Gentleman aware that it is now five and a half months since the Financial Secretary promised to consider this very deserving cause? Is he further aware that beneficiaries of the High Court are suffering because of the bad trusteeship of the Masters of the High Court, and that if this is allowed to continue as it stands it will create great injustice to those widows and orphans who can ill afford to lose money in this way?

Mr. Diamond: I am sure that with the hon. Member's great knowledge of these matters he appreciates that this is a very complicated matter, which affects large numbers of persons and requires careful consideration.

Mr. William Clark: If anything is done in this matter, will the hon. Gentleman give an assurance that it will be retrospective?

Mr. Diamond: No. I cannot give that kind of assurance.

Mr. Doughty: Whatever may be the rights and wrongs of this matter, will the hon. Gentleman make it clear that it is not the fault of the Masters of the High Court?

Mr. Diamond: I am grateful that the hon. and learned Gentleman should think so kindly of the Masters, one of whom happens to be my brother.

Rhodesia (Gold)

Mr. Wingfield Digby: asked the Chancellor of the Exchequer what additional annual burden will fall on the United Kingdom balance of payments as a result of the diversion elsewhere of over £7,000,000 of gold mined in Rhodesia.

Mr. Callaghan: The United Kingdom's balance of payments will not be affected, although the supplies of gold available on the London market may be.

Mr. Digby: Does the right hon. Gentleman's statement mean that the gold will be available for the sterling area if it goes to South Africa?

Mr. Callaghan: The movements of the gold market are extremely mysterious, but it is true to say that gold which starts in one place sometimes ends up in another.

Scottish £ Notes

Mr. Dempsey: asked the Chancellor of the Exchequer if he will introduce legislation to prohibit the exchange of Scottish £ notes in England for less than £1.

Mr. Callaghan: No, Sir. I do not know of any Scotsman who would accept less than 20s. for a £.

Mr. Dempsey: Is my right hon. Friend aware that Scotsmen in certain parts of England, particularly Manchester and Birmingham, have no option but to accept 19s. 6d. for the Scottish £ because that is all they get; and has the recent case been drawn to his attention of a Service man who was refused the right to spend two Scottish £ notes in a Naafi in Malaya on the ground that they were worthless; and will——

Mr. Speaker: Order. Even if the Scottish £ is short, the Question must also be short.

Mr. Dempsey: The fact is that these Scottish £ notes have to be given away more or less as matters of local interest as souvenirs.

Mr. Speaker: Order. I think the Chancellor is seized of the Question.

Mr. Dempsey: While——

Mr. Speaker: Order. The hon. Gentleman must resume his seat. Mr. Callaghan.

Mr. Callaghan: I am quite willing to offer the hon. Gentleman, shall we say, 19s. 9d. for any £ note. I do not want to exacerbate relations, and I am sure that it will produce a lot of correspondence in the Treasury, but the simple truth is that Scottish £ notes are not legal tender.

Mr. Speaker: Mr. Edward M. Taylor.

Mr. Dempsey: On a point of order, Mr. Speaker. In view of that most unsatisfactory answer by the right hon. Gentleman, I wish to give notice that I will make every effort possible to raise this matter on the Adjournment.

Mr. Speaker: Order. The hon. Gentleman should give notice in the usual form, but, by doing so, he now cuts out other supplementary questions in support of his point of view.

Retired Public Servants (Parity of Pensions)

Mr. Pounder: asked the Chancellor of the Exchequer if he will make a statement on parity of pensions for retired public servants based on position held and length of service regardless of the date of retirement.

Mr. Diamond: I would refer the hon. Member to what I said on the Second Reading of the Pensions (Increase) Bill on 18th November, at col. 1360.

Mr. Pounder: I am aware of that statement made by the Chief Secretary, but does he not recall that apparently a firm pledge was given by his party at the time of the last election, and that 15 months have elapsed, during which time all that the Government have said is that it is under review? Is this pledge going to be honoured, or is this yet another broken promise?

Mr. Diamond: The hon. Gentleman has been quite inaccurate in the statement that he has made. I dealt with this matter very fully. If he will be good enough to read what I said, he will see that I made a complete answer.

Sir G. Nicholson: Surely the hon. Gentleman recognises that his party has led people to believe that the return of a Labour Government would lead to something like parity? In spite of the records of both parties in the House, will he see that these great injustices are not permitted to persist just because these people have very little voting power?

Mr. Diamond: I listened very carefully to what the hon. Gentleman has said. I dealt with this matter very fully in my speech. I took the precaution first of looking at what was said in the party documents before my answer was given to the hon. Gentleman.

Retirement Pensioners (Income Tax)

Mr. Pounder: asked the Chancellor of the Exchequer if he will seek to exempt retirement pensioners from the payment of Income Tax on State retirement pensions; and if he will make a statement.

Mr. Diamond: No, Sir. I do not think this would be right.

Mr. Pounder: Does not the Chief Secretary appreciate that although a tax allowance in respect of insurance contributions is given when a person is earning, nevertheless when the pension is paid the recipient is in a less good position to pay tax than when he was earning, and would he please look at the tax charge which arises on State retirement pensions?

Mr. Diamond: The simple position is that National Insurance pensions are regular income, and therefore I should have thought that the hon. Gentleman would have agreed with me that they are properly included in income for Income Tax purposes.

Horticultural Industry (Glasshouses)

Mr. John Wells: asked the Chancellor of the Exchequer if he is aware of the hardship to the horticultural industry that will be caused by the proposed 40 per cent. tax on land scheduled for development; and if he will ex amine the possibilities of new tax reliefs for those building or rebuilding glasshouses with a view to offsetting this imposition.

Mr. Diamond: My right hon. Friend cannot propose any special tax reliefs for the horticultural industry. However, grants are available under the Horticulture Improvement Scheme towards replacing or reconstructing glasshouses.

Mr. Wells: Will the hon. Gentleman look at the position and realise that the whole traditional pattern of the British glasshouse industry has been very adversely affected by these tax changes, and that the comparable tax position of the glasshouse industry in Holland is very much more favourable? Will he seize himself of these figures and then perhaps receive a deputation?

Mr. Diamond: I am always prepared to receive a deputation. I was not quite sure from the point that the hon. Gentleman is making whether it would be preferable for me or for my right hon. Friend the Minister of Agriculture, Fisheries and Food to receive the deputation in question.

Hotel Equipment (Investment Allowances)

Mr. G. Campbell: asked the Chancellor of the Exchequer whether it is his policy that hotel equipment should continue to be eligible for investment allowances.

Mr. Diamond: I cannot anticipate the statement of the Government's intentions concerning incentives for investment and modernisation, which my right hon. Friend the Prime Minister referred to on 9th November.

Mr. Campbell: As the Chief Secretary made disparaging remarks about the eligibility of hotel equipment in the debate on 15th June, will the Chancellor bear in mind that this is an important matter to the hotel and tourist industries, especially in Scotland?

Mr. Diamond: I am sure that my right hon. Friend is well aware of those points.

Companies (Christmas Gifts)

Mr. Ridley: asked the Chancellor of the Exchequer whether, under his regulations, Christmas presents given by a company to its customers may be treated by the company as expenses before tax.

Mr. Diamond: Not unless they fall within the exception in Section 15, Finance Act, 1965, for gifts to overseas customers or for small advertising gifts.

Mr. Ridley: Would not the hon. Gentleman agree that this minor evasion of tax by presenting Christmas presents to people is going on on too great a scale? Will he make what he has just said well known to prevent this abuse from spreading further?

Mr. Diamond: I am very interested in what the hon. Gentleman has to say.

Valuation Officers

Mr. Dempsey: asked the Chancellor of the Exchequer what plans he has for increasing the number of valuation officers


in the Inland Revenue department, in view of the present shortage of staff and the additional duties which will be imposed upon them.

Mr. Diamond: The Inland Revenue will continue to recruit suitably qualified valuers. It also proposes to increase substantially the number of trainees in the Valuation Office who will prepare for the professional examinations. A new competition to this end will be announced shortly.

Mr. Dempsey: In view of the additional work which will be imposed on this Department, and as it is already snowed under, can my right hon. Friend say whether there is any intention to see that adequate salaries are paid, as one gets only what one pays for in this life?

Mr. Diamond: Salaries are subject to the usual negotiating machinery.

Mr. John Hall: Would not the Chief Secretary agree that he, his right hon. Friend, and the Government were warned that they were placing an intolerable burden on the Inland Revenue when the Capital Gains Tax and the proposals on the Land Commission were announced? Would he agree that perhaps in addition to making the quinquennial valuation a victim of this lack of officials, the Capital Gains Tax should also be dropped?

Mr. Diamond: There is no intolerable burden on the officials, and as a result of the measures being taken it is not expected that there will be any undue delay in coping with the responsibilities that are put on them.

Commonwealth Sterling Area Trade

Mr. Turton: asked the Chancellor of the Exchequer what consideration he has given to the memorandum on Commonwealth sterling area trade and payments submitted to the Commonwealth trade officials meeting by the Commonwealth Industries Association and the Economic Research Council; and what action he has taken.

Mr. Callaghan: I have read the memorandum which the right hon. Member was good enough to send me. As he knows, international discussions on

liquidity and aid have been proceeding under a new impetus since September.

Mr. Turton: As the Commonwealth countries have shown great interest in this memorandum, will the Chancellor conduct a close examination into this proposal before the Commonwealth Trade Ministers' meeting next year?

Mr. Callaghan: I have studied it, and I think that it has a number of ideas which might form part of the discussions that are going on; but I do not think that I could undertake to sponsor it as a conference document.

Mr. Iain Macleod: Could not the Chancellor give a warmer reply on this? Does not he agree that this is an imaginative and ingenious proposal for facing a very real and difficult problem? Could not he undertake to have a close examination made of this in advance of the meeting of Ministers to which my right hon. Friend referred?

Mr. Callaghan: I have had an examination made of it. I do not think that it is cast in a form in which it could be submitted to a meeting of Commonwealth Ministers, but that is not to say that any ideas which are of value should not be extracted—and they will be.

Local Authority Expenditure (Public Libraries)

Mr. Evelyn King: asked the Chancellor of the Exchequer whether, in restricting local authorities' expenditure, he will exempt from such restrictions money to be spent on public libraries.

Mr. Diamond: If the hon. Gentleman is referring to the deferment of public capital expenditure following my right hon. Friend's statement of 27th July, the answer is, "No, Sir".

Mr. King: Will the Chief Secretary accept that there is a logical distinction between cuts, or cut-backs, on civic centres and office buildings, and cuts in libraries which really are a part of education? Will he understand that there is considerable resentment among librarians about this?

Mr. Diamond: I understand that there is a distinction, but the line has to be drawn somewhere.

Balance of Payments Deficit (North America)

Mr. Sheldon: asked the Chancellor of the Exchequer what action he is taking to reduce the balance of payments deficit with the United States of America and Canada.

Mr. Callaghan: I take it that my hon. Friend is referring to the deficit on trade. Particular efforts are being made to increase exports to North America, which I am glad to say have risen this year by 15 per cent.

Mr. Sheldon: Is the Chancellor aware that during his visit to Moscow the Foreign Secretary drew attention to the £30 million imbalance of trade, and will he consider that now is the time to use our £400 million deficit with the North American Continent as a means of bargaining for rather betters terms than we have so far achieved in our balance of payments?

Mr. Callaghan: This is a constant preoccupation of mine. I think that the most important thing to do is to lower the barriers of trade so that we can improve our exports to the United States. This is what we are constantly trying to do.

Mr. Bruce-Gardyne: Would not the Chancellor agree that the decision to exercise the Government's option to purchase the F111 will vastly increase the present deficit to the United States?

Mr. Callaghan: No, it does not necessarily follow. It depends partly on the amount of imports that one has to use in any home-produced equivalent.

Malaysia (Double Taxation Agreement)

Mr. Ridsdale: asked the Chancellor of the Exchequer when the negotiation for a double taxation agreement with Malaysia will be likely to be completed.

Mr. Diamond: The terms of an agreement were settled at the beginning of last year but the subsequent secession of Singapore and the changes in the United Kingdom tax system raise the question of its revision; this matter will be taken up as soon as possible.

Mr. Ridsdale: In the meantime, before agreement is reached, why is the Treasury asking for payment in full on the pensioners' income, 40 per cent. of which has already gone, thanks to the fumbling financial policy of the Government, which is bewildering not only pensioners, but tax experts, both at home and abroad?

Mr. Diamond: The hon. Gentleman has gone rather far afield, but if there is any special case where he thinks there is particular hardship, if he will send it to me I shall be only too glad to look at it.

Mr. William Clark: In view of the last Budget, will not all double taxation agreements need to be re-negotiated?

Mr. Diamond: Many of them will need to be re-negotiated.

Mr. Lubbock: Does the Chief Secretary recall that I have drawn an individual case to his attention, and that he said that it must await the signing of a new double taxation agreement with Malaya?

Mr. Diamond: I do not recall it at the moment, but I am sure that the hon. Gentleman's recollection is correct.

Dividend Payments (Tax Revenue)

Mr. Kenneth Lewis: asked the Chancellor of the Exchequer whether he expects any increase in tax revenue this year from increased dividend payments.

Mr. Diamond: No, Sir.

Mr. Lewis: Is the Chief Secretary aware that many companies are increasing their dividends because of the uncertainty of the future tax position, which seems to have changed since the last Budget? Can he promise that Corporation Tax will stay at 35 per cent., as promised at the time of the last Budget? Is he further aware that his hon. Friend the Member for Buckingham (Mr. Maxwell) is rumoured as shortly going massively to increase his dividend because of this?

Mr. Diamond: It would be improper to make any estimate whatsoever of what might be in my right hon. Friend's mind when he comes to introduce his Budget.

Government Stock (Rhodesian Residents)

Mr. Evelyn King: asked the Chancellor of the Exchequer if he will estimate the annual value of interest payments to


residents in Rhodesia in respect of Government stock held by them; and what warning is given, at the time of investment, to purchasers of Government stock that interest payments might in certain circumstances be withheld.

Mr. Callaghan: The answer to the first part of the hon. Member's Question is that no reliable estimate can be given. The answer to the second part is none, Sir.

Mr. King: Is it not still the fact that savers or investors cannot get their money? Is there any precedent for withholding interest from loyal citizens, according to the Government's own definition, who have invested in National Savings? Is not this a breach of faith, and was the Chairman of the National Savings movement consulted?

Mr. Callaghan: I had not realised that this Question was concerned with National Savings. I thought that it was concerned with Government stock, and it is that to which I addressed my Answer.

Estate Duty

Mr. Stratton Mills: asked the Chancellor of the Exchequer if he intends to alter the exemption from Estate Duty where one party to a marriage leaves a life estate to the surviving spouse and Estate Duty has been paid on the first death.

Mr. Diamond: My right hon. Friend cannot disclose his intentions in advance of the Budget statement.

Mr. Stratton Mills: Is the Chief Secretary aware that in a letter to me the Financial Secretary described this as an anomaly? Is the right hon. Gentleman aware that if this exemption were withdrawn it would cause great resentment and quite a lot of hardship?

Mr. Diamond: I shall certainly take note of what the hon. Gentleman has said.

Mr. Bellenger: On a point of order. The close season for Chancellors not answering Questions on the grounds of not disclosing what their Budget proposals are going to be seems to be getting longer and longer. Mr. Speaker, can you say whether there is any limit whatever, either statutory or otherwise?

Mr. Speaker: That is not exactly a point of order, and I hope that hon. Members will hesitate before raising similar points during Question hour when, in any event, they might he better raised at the end of Question Time.

Investment Dollar Premium

Mr. Gresham Cooke: asked the Chancellor of the Exchequer, in view of the recent rise in the investment dollar premium to over 16 per cent., and of the fact that it is damaging to the £ to have such a high premium quoted for switching to a foreign currency security, what action he will take to control any further increase in this premium.

Mr. Callaghan: I have no statement to make on this matter.

Mr. Gresham Cooke: Is the Chancellor aware that the rise in premiums against the £ is preventing investors from investing money if they wish in America, and not only that, but is showing up the falling value of the £ on world markets? Should not this premium be controlled in the national interest?

Mr. Callaghan: The second part of the hon. Gentleman's statement is not true. He knows that the value of the £ in the exchange markets stands higher today than it has stood for two years, and that what happens on a thin market like this bears no relationship to the value of the £.

Purchase Tax

Mr. Barnett: asked the Chancellor of the Exchequer why Purchase Tax is charged on a patent fastener for fitted carpets and not on the sewn-on rings.

Mr. Diamond: Fasteners designed for fixing carpets to the floor are liable to Purchase Tax as hardware and ironmongery of a kind used for domestic or office purposes. But the charge does not extend to general purpose rings and washers.

Mr. Barnett: Is the Chief Secretary aware that, despite his reply, it seems idiotic to many people that, at a time of great labour shortage, a labour-saving device of this description should be taxable, while the ring sewn on is tax


free? Will he be good enough to look at it again?

Mr. Diamond: I have looked at it. I am aware of what my hon. Friend has said, and I hope he will permit me to add that I am also aware of the fact that any hon. Member sitting in my hon. Friend's place, or thereabouts, is likely to get a similar response to a similar Question.

Married Teachers (Income Tax)

Mr. Brian Harrison: asked the Chancellor of the Exchequer if he will bring in legislation to permit expenses incurred by married teachers in making provision for their own children whilst they themselves are in school to be deductible against Income Tax.

Mr. Diamond: No, Sir.

Mr. Harrison: Will the Chief Secretary look at this again, as it would tend to help considerably to release a number of married women teachers who are in notoriously short supply at the moment.

Mr. Diamond: I am sure that the hon. Gentleman appreciates that married women already receive special Income Tax reliefs on their earnings, including the wife's earned income allowance. If my hon. Friend pays careful attention to the net result of these reliefs, I am sure that he will not be disposed to press his question.

Fairfield Shipbuilding Company Limited

Sir R. Thompson: asked the Chancellor of the Exchequer what sums have been advanced to the Fairfield Shipbuilding Company Limited; and what reorganisation has been effected to enable this yard to carry out its contracts, and to protect public investment in it.

Mr. Callaghan: £450,000. I would refer the hon. Member to the statement made by the First Secretary on Thursday, 9th December.

Sir R. Thompson: Is not the failure of one of our most modern yards, with £32 million worth of orders in hand, menacing the whole of our shipbuilding industry? Is not this the result of restrictive practices and labour troubles? Ought not the right hon. Gentleman to be considering

getting at the root causes of this? If this is not done, the whole future of our shipbuilding industry is at risk.

Mr. Callaghan: This is a matter for my right hon. Friend the President of the Board of Trade. The hon. Member seems to be forgetting that there is an extremely high-powered body, under the chairmanship of Lord Geddes, which at the moment is examining these questions, and I have already informed the House that it will be reporting on them within six weeks or two months.

Railway Season Ticket-holders (Tax Relief)

Mr. Doughty: asked the Chancellor of the Exchequer if he will consider granting tax relief to those who travel between their residence and place of work in respect of the cost of railway season tickets purchased for this purpose, so that the strain on urban roads may be reduced.

Mr. Diamond: No, Sir.

Mr. Doughty: Will the hon. Gentleman look at this matter again, as a very effective method of persuading people to take to the railways and relieve the roads? Is not the carrot better than the stick?

Mr. Diamond: Whatever may be the argument in support of what the hon. and learned Gentleman is properly putting forward, the method of dealing with it is not by creating greater anomalies in the Income Tax system.

Mr. Deedes: Will the hon. Gentleman bear in mind that one solution would be to provide tax relief for those who co-operate in staggering hours?

Rural Bus Operators (Fuel Oil Tax)

Mr. Bessell: asked the Chancellor of the Exchequer if he will remove the tax on fuel oil used by rural bus operators, in view of the ever increasing cost of rural bus services to the public.

Mr. Diamond: This is a Budget matter on which I cannot comment.

Mr. Bessell: Is the hon. Gentleman aware that there is a serious risk of many rural bus services breaking down in consequence of the high fuel tax, and that


this is a very serious problem in areas where rail closures have taken place? Will he consider this question again, as a matter of urgency?

Mr. Diamond: The problem is undoubtedly a serious one, but I cannot accept that the one cause is that to which the hon. Member has referred.

Mr. Snow: Will my hon. Friend or the Chancellor of the Exchequer, when considering his Budget proposals, bear in mind that those hon. Members who represent rural areas are concerned about this matter and that he might do worse than to obtain the opinion of the Minister of Transport, in view of the action of the Traffic Commissioners, who are not always in touch with rural requirements?

Mr. Diamond: I can assure my hon. Friend that my right hon. Friend the Chancellor is well seized of the urgency and difficulty of this problem.

Sir Rolf Dudley Williams: Will not the hon. Gentleman give an undertaking at least that the petrol tax will not be increased in the Budget?

Mr. Diamond: There is no need for me to add that I am unable to give an undertaking of that kind.

Teaching Machines

Mr. Gresham Cooke: asked the Chancellor of the Exchequer how much Her Majesty's Government spent on teaching machines and their provision during the last available year.

Mr. Diamond: For Civil Service training purposes the Government spent £17,567 in the year ending 31st August, 1965; £12,090 on the purchase or hire of electric teaching machines and the balance on simpler manually operated equipment.

Mr. Gresham Cooke: Is the Chief Secretary aware that in spite of this great technical break-through to assist the teaching profession the Ministry of Education this year has spent only £19 on teaching machines? Is it not disgraceful that a Government which promised technical advance take so little notice of this new development?

Mr. Diamond: The hon. Member's Question referred to the Civil Service.

Oral Answers to Questions — DEFENCE

Mr. Zilliacus: asked the Prime Minister, in view of the need to ensure that measures for strengthening collective defence must not only not make disarmament measures more difficult but should contribute to making disarmament agreements easier, if he is satisfied that British defence policy satisfies this condition; and if he will raise these issues in his forthcoming discussions with President Johnson on Western defence policy.

The Prime Minister (Mr. Harold Wilson): The answer to both parts of the Question is, "Yes, Sir".

Mr. Zilliacus: Is not the Prime Minister convinced by now that any form of association of Western Germany with any kind of international nuclear force would constitute an insuperable obstacle to reaching agreement with the Soviet Union, as he himself told the House would be the case on 3rd July, 1963? In those circumstances, will not he represent to President Johnson the need for abandoning his scheme?

The Prime Minister: I referred in July, 1963, to the idea of a German finger on the trigger. I also criticised the then current scheme for an M.L.F., which we have opposed. This has been fully discussed at Question Time. I hope that there will be an opportunity for discussing all these questions more fully in the foreign affairs debate.

Mr. Heath: Will the Prime Minister now give an assurance confirming what he has said on previous occasions, that the measures necessary for the nuclear defence of the West will take priority over other political measures, such as the obtaining of a non-proliferation agreement?

The Prime Minister: I think that we have dealt with this matter in the past. We are certainly not giving an absolute priority to the kind of scheme that the right hon. Gentleman mentioned in Der Spiegel, about associating Germany with nuclear weapons, if that means that there is no hope of stopping the spread of nuclear weapons, which is of vital importance. We hope within the Alliance to work out methods which do not stand in the way of a non-dissemination agreement.

Mr. Heath: I mentioned no scheme in Der Spiegel. Perhaps the Prime Minister did not read it in the original German. Surely the Prime Minister himself will not argue that such a scheme as has been put up by Mr. McNamara, or his own A.N.F., is not perfectly compatible with a non-proliferation agreement.

The Prime Minister: I read the translation. We have expressed support for Mr. McNamara's scheme. It involves no dissemination of nuclear weapons; on the contrary, there is a guarantee against the dissemination of nuclear weapons. But if, as I understand, the right hon. Gentleman wants to give priority to nuclear sharing over nuclear non-dissemination, I cannot give an assurance to that effect.

Oral Answers to Questions — NASSAU AGREEMENT

Mr. Blaker: asked the Prime Minister whether, in the course of his forthcoming discussions with President Johnson, he intends to renegotiate the Nassau Agreement.

The Prime Minister: The purpose of my visit to Washington is not to negotiate so this does not arise immediately.

Mr. Blaker: Does the Prime Minister recall his speech on 14th January last year, and other speeches, in which he said that the party opposite would renegotiate the Nassau Agreement, in the sense of ending the proposal to purchase Polaris missiles from the United States? Will he accept our congratulations on having completely abandoned that position?

The Prime Minister: I am deeply touched at the assiduity with which the hon. Member reads my past speeches. I wish he would read them right through. As for the Nassau Agreement, I made it clear last December that changes would be necessary arising out of our proposals for the Atlantic Nuclear Force. If those proposals go through it will be necessary to renegotiate the Nassau Agreement. If, as a result of the current discussions in N.A.T.O., other proposals come up that we are prepared to contemplate, action on these may be necessary.

Oral Answers to Questions — VIETNAM

Mr. Zilliacus: asked the Prime Minister if he will seek to discuss with President Johnson, at their forthcoming meeting, the need to end the bombing in Vietnam and to hold negotiations, which would include the Vietnam National Liberation Front, on the basis of the 1954 Geneva Agreements and the United Nations Charter.

Mr. Orme: asked the Prime Minister what fresh initiative Great Britain proposes to take with the United States Government to end the bombing of North Vietnam.

The Prime Minister: As I explained on 9th December, I hope to discuss all aspects of the Vietnam problem with President Johnson.

Mr. Zilliacus: Will my right hon. Friend make it clear that in these discussions he will hold by the Geneva Agreements providing for the reunification and military neutralisation of Vietnam as a basis for a settlement, and will rule out the use of force or the threat of force, in the form of the American occupation, to extort terms which are inconsistent with the Geneva Agreements?

The Prime Minister: Leading American spokesmen have expressed their willingness to negotiate on the basis of the 1954 agreement as, to use my hon. Friend's phrase, the basis of a final settlement. With regard to the question of bombing raids, which is mentioned in the Question, we made clear in the Commonwealth Prime Ministers' communiqué our view that the bombing and the infiltration should be stopped—and stopped together—as a basis for a ceasefire and negotiations.

Mr. Orme: When my right hon. Friend sees President Johnson, would he try to obtain an extension of the proposed cease-fire on Christmas Day for many more days and, at the same time, impress on President Johnson that any extension of the war which might include the whole of South-East Asia—including China—would be abhorrent to the British people?

The Prime Minister: The wider danger referred to by my hon. Friend


will be abhorrent not only to the British people hut, I am certain, to the whole world—not least to the United States and any other country which is involved in this matter. With regard to the bombing, we have repeatedly said that if there were to be a suggestion of linking an agreement by Hanoi to go to the conference table with the stopping of the bombing, this is something which we would want to pursue. This was one of the ideas in the minds of the members of the Commonwealth Peace Mission. We have not yet had any indication—though we may get it one day—that Hanoi would be willing to come to the conference table on that or any other reasonable basis.

Mr. Doughty: When the Prime Minister stresses that negotiation would be welcome to everybody, would he also thank the President for the very great efforts of the United States to stop the over-running of the Far East by Communist military forces?

The Prime Minister: We have repeatedly said, in many debates, that we support the United States in their policy in Vietnam. At the same time, we pressed the United States very strongly last spring, and we have pressed Hanoi repeatedly since that time, to agree to negotiate and to end this war to which, as we have repeatedly said, there can be no military solution.

Oral Answers to Questions — ATLANTIC ALLIANCE (NUCLEAR CONSULTATION)

Mr. Blaker: asked the Prime Minister what is the policy of Her Majesty's Government on the setting up of a nuclear committee as a means of achieving nuclear sharing within the Atlantic Alliance.

The Prime Minister: We have supported the proposal for a Special Committee of North Atlantic Treaty Organisation Defence Ministers to examine and report to the North Atlantic Council on ways of improving nuclear consultation in the Alliance.

Mr. Blaker: The Prime Minister will be aware that the Soviet Union recently came out very strongly against this proposal. Does he not agree that, in assessing the weight to be attached to that posi-

tion, it is important to hear in mind that, in spite of recent improvements in Soviet attitudes towards the West, it is almost certainly still one of their major objectives to weaken the N.A.T.O. Alliance?

The Prime Minister: My right hon. Friend the Foreign Secretary discussed these matters at some length a couple of weeks ago in Moscow, and they have been further pursued in Paris this week We have repeatedly stressed that any proposal of this kind does not involve what the Russians fear—one understands their fear—that there would then be a German finger on the nuclear trigger. This is a consultative committee which could be very valuable: it does not involve dissemination.

Mr. Paget: Would not many of the difficulties in the way of this proposal be removed, particularly the Russian objections, if we were to achieve parity with the Germans by abandoning our independent nuclear power? Was not this formerly my right hon. Friend's policy? Why is he not getting on with it?

The Prime Minister: I thought that I satisfied even hon. Gentleman opposite, to say nothing of my hon. and learned Friend, in the debate last. December that the claim that we had an independent nuclear power was a completely bogus claim. The proposal which we have made for the Atlantic Nuclear Force, in which we have sought and offered to internationalise this deterrent, I should have thought—[Interruption.]—this is a very serious matter—would have met the requirements of my hon. and learned Friend in the suggestion which he has just made.

Mr. Grimond: Is it the policy of the Government that this committee should discuss control of the planning of hostilities in a nuclear war outside N.A.T.O. and the N.A.T.O. area?

The Prime Minister: Yes, Sir, I very much hope so. I think that one of the defects in previous discussions in N.A.T.O.—as both parties have said, from both sides of the House, before and since the election—is that discussions about the use of nuclear weapons have been too narrowly related to the area of the Alliance itself. For example, there was not sufficient freedom to discuss the use


of nuclear weapons in an area which is outside N.A.T.O. but which might plunge N.A.T.O. into war.

Oral Answers to Questions — LORD BEECHING (TRANSPORT CO-ORDINATION STUDY)

Sir R. Nugent: asked the Prime Minister on what date he first asked Lord Beeching to undertake single-handed the transport co-ordination study.

The Prime Minister: On 13th November, 1964, Sir.

Sir R. Nugent: As Lord Beeching's pro-railway evidence to the Geddes Committee was given months before this and as the Prime Minister has given his reasons to the House for deciding against Lord Beeching, in view of this disqualification, why did he ask him in the first place?

The Prime Minister: The hon. Gentleman has worked hard, but I did not say that it was a reason for deciding against Lord Beeching, but that it was a reason for saying that he should have assessors who would be capable of representing the road haulage interests. Otherwise, their interests would have had to be expressed, as I am sure they would have been, by hon. Gentlemen opposite when the Report was debated. From 13th November and for the next month, we were concerned with other matters with Lord Beeching—namely, the terms on which he should return to I.C.I. and the terms on which he could carry on his chairmanship of British Railways and hold this inquiry—after which it was clear that we would not agree on the assessors.

Mr. Heath: When the right hon. Gentleman first offered the post to Lord Beeching, did he then submit that assessors should sit with him, or was this raised only after the Prime Minister's return from the United States?

The Prime Minister: No, Sir. To the best of my memory, I did not raise it with Lord Beeching at that time—[HON. MEMBERS: "Why not?"]—but I know that it was being discussed. I think that the Ministry of Transport was discussing it at that time, but we ran into many other difficulties, including discussions with the head of I.C.I. about the period for which Lord Beeching could be

released—I was involved in four or five meetings: we had to get over that—before we knew whether Lord Beeching was willing to undertake any job of this kind. Before this was clear, the other difficulties supervened which, very much to my surprise, meant that he was not able to accept the assignment.

Mr. Mapp: Is my right hon. Friend aware that many hon. Members on this side of the House are much more interested in the co-ordination of transport than in the people concerned? When can we expect the policy of coordination followed by legislation which is long overdue and which hon. Members want?

The Prime Minister: I share my hon. Friend's keen desire to see this done. As I have said many times, I was disappointed that we were not able to get Lord Beeching on the terms I mentioned, so that we might have been a good deal forrader with the integration plan than we are. I think that we were right to insist on its not being a report, which would certainly have been bitterly attacked by hon. Gentlemen opposite because it did not pay enough attention to the road haulage interests as well.

Mr. Heath: Does not the Prime Minister's statement indicate that he made this proposal, quite properly, to Lord Beeching, that, when he got back from the United States, he was then forced, under pressure from the Minister of Technology, to insist on the assessors sitting with Lord Beeching, and that that is why the latter had to refuse this position?

The Prime Minister: I am sorry to see the right hon. Gentleman casting so vainly about for these little attacks on the Government. If this is the best he can do after six months—borrowing ideas from his back benchers—I am really disappointed. If he cannot do better than that—[HON. MEMBERS: "Answer"]. I am going to answer, but we were told that we would get attacks from the right hon. Gentleman—

Mr. Speaker: Order. The Prime Minister must come to his Answer.

The Prime Minister: Yes, Sir. I am about to do so.
The answer to the Question is, as I said, that when I approached Lord Beeching on the first occasion, he immediately raised with me a number of questions affecting his future and the subject of I.C.I. and British Rail. These had to be settled before we could discuss the basis or the terms of reference of his inquiry. When we came to discuss whether it was possible for him to undertake the inquiry, this problem arose. It did lot come from pressure whether by my right hon. Friend or anyone else. It was a reasonable requirement, which I think that the right hon. Gentleman if he had been in my place would have put to Lord Beeching.

Sir R. Nugent: In view of the unsatisfactory nature of that reply, I beg to give notice that I will raise the matter on the Adjournment as soon as possible.

Oral Answers to Questions — MINISTERS (STATEMENTS OF POLICY)

Mr. Bryan: asked the Prime Minister what instructions he has given to Ministers regarding the announcing of important statements of policy in the form of Written Answers to Questions.

The Prime Minister: No special instructions are necessary, Sir.

Mr. Bryan: If the Prime Minister has given no instruction, would he at any rate set an example? Would he tell the House why he so quietly announced the promotion of the Minister of Technology to wider responsibilities in the form of a Written Answer to a planted Question, instead of facing questions in the House on this subject?

The Prime Minister: I should have loved to have faced Questions in the House on this subject and if the hon. Member had put down a straight Question on that, he would have been given the Answer. If the hon. Gentleman is interested in the matter he should put down a Question, but not a vague one of this kind.
The Question on the Order Paper does not refer to the statement which the hon. Gentleman has just made, and he will recognise that it is difficult in any case to decide whether the House would be interested in a Written Answer. Some-

times we almost get the bird from hon. Gentlemen opposite for answering orally Questions which we feel are important but which they think are not. It is difficult to agree on one's judgment in this matter.

Several Hon. Members: rose—

Mr. Speaker: Order. We must, with regret, leave Questions now.

RHODESIA (PAYMENT OF PENSIONS)

The following Question stood upon the Order Paper:

Mr. J. H. OSBORN: To ask Mr. Chancellor of the Exchequer, what rate of interest applies to Her Majesty's Government's money due to residents in Rhodesia for pensions and now being held back.

The Chancellor of the Exchequer (Mr. James Callaghan): With permission, Mr. Speaker, I will now answer Question No. 53.
In response to the humanitarian considerations involved, and in accordance with the advice received from the Governor of Southern Rhodesia, Sir Humphrey Gibbs, permission will again be given for payments from the United Kingdom of pensions due to residents of Rhodesia. The question of interest payments does not therefore arise. I should emphasise that this decision implies no change of policy in the tight and effective control that is being exercised over other financial transactions.

Mr. Osborn: Is the right hon. Gentleman aware that this announcement will be welcomed in Rhodesia by all those who are affected and that I thank him for changing his mind on this subject?

Mr. Callaghan: The control is bound to involve both dislocation and inconvenience in this country and in Rhodesia. In the special case of payments of pensions, I think it is right that humanitarian considerations should prevail.

Mr. Zilliacus: Does my right hon. Friend's statement mean that Service pensions will again be paid to policemen and officers, United Kingdom subjects, who are now serving in Ian Smith's forces?

Mr. Callaghan: It is not possible to make any administrative distinctions without setting up a large machine at this end, which, in present circumstances, I do not think I should be well advised to do. I hope that the pursuit of the other measures will ensure that Rhodesia will return to constitutional methods of Government before such a step is necessary.

Dame Irene Ward: While thanking the Chancellor for his change of opinion, may I ask him why it is that the Government always put the case of these kind of people, pensioners, at the bottom of the list of priorities?

Mr. Callaghan: That was not the criticism levelled against us from outside this country a year ago when one of the first steps we took on coming to office was to make a record increase in pensions.

Mr. Driberg: While allowing for the humane treatment of existing elderly pensioners, would my right hon. Friend at least make it clear that those people who are at present in die Civil Service and Armed Forces and who are continuing to serve the illegal régime in Rhodesia will forfeit their pension rights for the period from U.D.I. until constitutional government is restored?

Mr. Callaghan: I would not think it proper to give such an undertaking.

Mr. Heath: As this matter was raised from the Front Bench, may I join my hon. Friends in thanking the Chancellor for admitting frankly that this measure was a mistake and for putting it right?

Mr. Callaghan: I am always ready to accept that there are occasions when one is handling large events—and we have not handled an event as large as this for a long time—that in a general prohibition of payments events may take place which, on reflection, ought to be reversed. I am glad that we have now been able to do this, although I am sure that I have the support of the whole House in saying that the control of payments to and from Rhodesia should be very firmly administered.

Dr. Bennett: Since the Chancellor has been good enough to reveal his intention to relax this restriction on the civil pensioners, and since this arose

during our debates on the Pensions (Increase) Bill, can he affirm that this restoration will also apply to Service pensioners?

Mr. Callaghan: As far as I know, it applies to all pensions, but I do not recall the particular point which was raised during our consideration of the Pensions (Increase) Bill. If the hon. Gentleman will write to me on the subject I will give him an answer.

RECRUITMENT OF NURSES (NORTH WEST METROPOLITAN REGION)

Mr. Wood: Mr. Wood (by Private Notice) asked the Minister of Health why, in view of the shortage of nurses, hospital management committees in the North West Metropolitan Region have been instructed to stop recruitment until next March.

The Minister of Health (Mr. Kenneth Robinson): Nurse recruitment in the region exceeded all expectations and the Board believed that a temporary standstill, which does not apply to student and pupil nurse recruitment, was needed in order to contain expenditure within its budget.

Mr. Wood: Does the right hon. Gentleman agree that many hospitals are still short of nurses and that this decision, coming only two months after the start of the campaign to recruit more nurses, is difficult to understand? Would there not seem to be something wrong with the Government's priorities, and is the removal of National Health Service charges more important than the recruitment of the necessary number of nurses?

Mr. Robinson: Perhaps when I tell the right hon. Gentleman that in this region in the course of the last year the numbers of nursing staff as a whole have increased by 5·6 per cent., he will see why it is necessary to have this temporary standstill. I assure him that the necessity for boards to keep within their budgets is no more than a continuation of the policy which was adopted by the previous Government.

Mr. Will Griffiths: Would my right hon. Friend at least give an assurance that he will not impose a ceiling on those regions where the nursing services are


still below what the local residents know to be adequate?

Mr. Robinson: This Question relates to only one out of 15 hospital regions in the country. I have already explained that the standstill does not apply to student and pupil nurses. As for the publicity campaign, I assure the House that the response has been encouraging—indeed, so encouraging that it has proved quite a strain on the finances of some regional boards.

Mr. Prior: Is the Minister aware that this also applies in several other regions; that in Harlow New Town, for example, the hospital there cannot be staffed because he has placed a restriction on the number of nurses who can be employed and that at the new hospital a ward is standing empty?

Mr. Robinson: With respect to the hon. Gentleman, that is not the correct position I have not placed a restriction on the number of nurses to be employed. These are priorities for the regional boards to determine. I merely fix the allocation of money for the regional boards.

Mr. Rankin: Would my right hon. Friend make it clear that his statement does not apply to Scotland?

Mr. Robinson: I did not think it was necessary for me to remind the House that I have no responsibility for the health services north of the Border.

Mr. Lubbock: Does the Minister recall the violent criticism which was expressed by hon. Members of his party when a similar thing happened under a Conservative Government? Would he say whether the increased recruitment in this region has brought the hospitals anywhere near to establishment?

Mr. Robinson: Nurse establishment figures are not officially recognised. All I would say about this is that there has been a substantial increase in the number of nurses in this region, and I remind the House that over the country as a whole the total number of nurses in employment last March was the highest ever on record.

Several Hon. Members: Several Hon. Members rose——

Mr. Speaker: Order.

Mr. William Hamilton: On a point of order. May I seek your guidance, Mr. Speaker, as to exactly why this particular Question was allowed as a Private Notice Question? It does not seem to many of us that it is of sufficient national importance to warrant this kind of preferential treatment. If this is to be used as a precedent, it would seem that many of us could put in Private Notice Questions to get preferential treatment when a Minister cannot be reached in, say, the next two or three weeks.

Mr. Speaker: I am grateful to the hon. Gentleman for enabling me to explain the position. He must not be too intoxicated with his own undoubted success previously in calling attention to points of order. The simple answer is that the question of whether a Private Notice Question can be allowed rests entirely in the hands of the Speaker. If the Speaker in any way misuses that responsibility in the opinion of the House, then hon. Members have their remedy by putting a Motion on the Notice Paper.

IRISH REPUBLIC (FREE TRADE AREA)

The Prime Minister (Mr. Harold Wilson): With permission, Mr. Speaker, I wish to make a statement.
As the House will know, we have been having discussions with the Government of the Irish Republic over the past few months about the possibility of establishing a Free Trade Area between our two countries. I am glad to say that these negotiations have now been concluded successfully, and I am signing with Mr. Lemass this evening the Agreement establishing a Free Trade Area. I am arranging for a copy of the Agreement, and related documents, to be placed in the Library, and for its publication in a White Paper in the next day or so. I am sure that hon. Members will share my pleasure at this significant and satisfactory development in our relations with the Republic of Ireland.

Mr. Heath: The whole House will like to welcome an Agreement of this kind, but the Prime Minister will acknowledge that his statement tells us very little other than that agreement has been


reached. Can he tell us a little more about the scope of the Agreement? Can he tell us how it affects other trade agreements with Commonwealth countries and with the E.F.T.A. countries? Will it require legislation so that we shall have an opportunity to discuss it? May I join with him in expressing the hope that the Agreement will enable relations between Ulster and Eire to become even closer as a result of the initiative taken by the Prime Minister of Ulster and the Prime Minister of Eire?

The Prime Minister: I share the right hon. Gentleman's views about relations between Ulster and the Republic; and also his tribute to the initiative taken last year. The House will wish to study the Agreement—it is rather long and I would not take up too much of the time of the House—but it does include a reduction of our tariffs on industrial goods by ten annual instalments of 10 per cent. The Agreement concerns certain agricultural questions, including store cattle and carcase meat, and about trade both ways for agriculture and fishery products. There is a special section on cotton textiles, certain aspects of the butter quota, and so on.
The Agreement enters into force on 1st July next year. I think that legislation will be required for certain parts of it, which will give the House a chance, at any rate, to debate some of the subjects in it. We have had E.F.T.A. and Commonwealth interests very closely in mind throughout the negotiations, and nothing we have done in any way weakens our relations with E.F.T.A. The right hon. Gentleman will, of course, be aware of the statement made in the Irish Parliament by Mr. Lemass and others about their intentions in regard to that aspect.

Mr. Hector Hughes: As the matter is of such great international importance, will my right hon. Friend go a step further than placing a copy of the Agreement in the Library by issuing the Agreement as a White Paper?

The Prime Minister: Yes, Sir. I said that we would publish the Agreement in full in the White Paper.

Mr. Godber: Will the. Prime Minister tell us a little more about the agricultural

side of the Agreement? In particular, what effect will it have on guaranteed prices and on store cattle coming to this country? Will it increase this trade, as this is an important matter for the home market? What is the benefit to the carcase meat trade?

The Prime Minister: I would prefer the right hon. Gentleman to study the White Paper with all its details. I can assure him that while the Agreement involves concessions in respect of agriculture—as it must in any Anglo-Irish free trade area—my right hon. Friend the Minister of Agriculture has been very much in the centre of these negotiations, and I can certainly say that the Agreement will not in any way harm or prejudice the position of our own farmers and the plans announced for their future.

Mr. Duffy: Is my right hon. Friend aware that his statement will give the greatest satisfaction to many of his hon. Friends—one cannot presume to speak for all hon. Members on both sides of the House—and that it will be the fervent wish of many of us that his announcement will be merely the prelude to even closer relationships between Ireland and England?

Captain Orr: Is the Prime Minister aware that the Agreement's general aim of liberalisation of trade with the Irish Republic will be warmly welcomed, particularly in industrial circles in Northern Ireland, but that we shall want very carefully to study the agricultural details? Can he say to what extent the implementation of the Agreement will require legislation, delegated or otherwise, in this House?

The Prime Minister: I understand, of course, that the hon. and gallant Member will want to study the Agreement, and I know that he will understand that it cannot be a one-sided agreement—with all the concessions on one side. These things have to be balanced. But I can tell him that we have had the interests—I do not know about the industrial interests, but the general interests—of Northern Ireland very much in mind. We have been in the closest touch throughout the discussions. The Agreement will require both delegated legislation and a Bill to give effect to at any rate parts of it.

Mr. Mikardo: Is the Prime Minister aware that one factor that has for a long time inhibited trade between this country and the Republic of Ireland is the extraordinarily high sea freight charges across the Irish Channel, which I think are probably almost the highest charges per ton mile of any in the world? Will he follow up this good step by asking his right hon. Friend to look at the possibility of reducing these freight charges?

The Prime Minister: I think that this problem—which, as we know, very much affects the economic development of Northern Ireland—is very much in the minds of both the Governments signatory to the Agreement. Of course, one favourable development in recent years has been the very significant increase in roll-on-roll-off cargoes, and this has done something to mitigate the pretty high sea freights to which my hon. Friend draws attention.

Mr. George Y. Mackie: Is the Prime Minister aware that Liberals welcome this step towards free trade across the Irish Channel and hope that, intoxicated by his success in this direction, the right hon. Gentleman will now transfer his efforts to the English Channel and do something about the far greater area of free trade available there?

The Prime Minister: One thing at a time. As the whole House knows, previous attempts very bravely undertaken by the Deputy Leader of the Opposition to get a free trade area between ourselves and Europe were not successful, but no one has ever thought that that was his responsibility or fault. So we will have to see what prospects arise.

BUSINESS OF THE HOUSE

The Lord President of the Council (Mr. Herbert Bowden): With permission, Mr. Speaker, I should like to make a short Business statement.
After the Second Reading of the Housing Subsidies Bill tomorrow, the House will be asked to consider the Lords Amendments to the Housing (Slum Clearance Compensation) Bill.
The House will also wish to know that, in addition to the business already

announced for Friday, we propose to take the Second Reading of the Church of England Convocations Bill [Lords].

YOUTH EMPLOYMENT SERVICE (REPORT)

The Minister of Labour (Mr. R. J. Gunter): With permission, Mr. Speaker, I should like to make a statement.
Under the Chairmanship of Lady Albemarle, a Working Party set up by the National Youth Employment Council in January 1964 has been considering the future development of the Youth Employment Service in the light of recent developments in education and the changing needs of industry. The Working Party's Report is published today. On behalf of the Government, I wish to thank Lady Albemarle and her colleagues for their very thorough examination of these problems, which are of such importance to young people and our national prosperity; and for producing so thoughtful and constructive a Report.
The Government accept the Report as providing valuable guide lines for the development of the Service over the next few years. The two major priorities are, clearly, staffing and staff training. As regards the former, the Government agree that more staff will be needed to enable the Service to meet the increasing demands which are being made on its officers, and that the progressive build-up of staff which has been a feature of recent years should be continued. I am proposing shortly to issue guidance on this matter to the local authorities concerned and to review the staffing needs of the Service in those areas where it is operated by my Department. As regards the training of staff, the Government accept the need for urgent action to extend the existing facilities for intensive in-service training, and I am proposing to set up a full-time Training Unit for this purpose under the direction of the Central Youth Employment Executive.
Before reaching a decision on recommendations whose implementation would require legislation, I propose to consult the interested local authority associations.

Sir K. Joseph: Is the Minister aware that we wish to be associated with his thanks to Lady Albemarle and her Committee for their Report? This Committee


was set up by my right hon. Friend the Member for Grantham (Mr. Godber). Has the Minister noticed that we on this side regard this whole subject as so important that we propose to expand the service, when we return to power, into a careers advisory service? The Minister will be aware that this Report has only just become available. Would he please answer this question? Does Lady Albemarle's Committee deal with the important problem of staff structure and promotional prospects?

Mr. Gunter: The Report does contain a reference to that. I am fully aware that the Working Party was set up by the previous Administration. As to the present Youth Employment Service being expanded into a careers advisory service. I think that the right hon. Gentleman was quoting from "Putting Britain Right Ahead". I forestalled him a little. I agree, and always have agreed, that there is a need for vocational guidance and such facilities for persons over 18 years. I am tackling this problem now in two ways. Early next year we are starting an experimental occupational guidance scheme for adults, which will operate initially in 11 areas. I also intend to consult the interested local authority associations about raising the upper age limit for the Youth Employment Service, in view of educational developments, particularly in view of the higher school leaving age.

Mr. David Steel: Is the Minister of Labour aware that my party also would like to welcome the Report and thank the Committee? Since the Government accept the need for urgent action, would it be fair to ask when he proposes to set up the full-time training unit? Would he think it would be fairly soon?

Mr. Gunter: I shall move with all possible speed.

PERSONAL STATEMENT

Mr. Box: Mr. Speaker, with permission, I wish to make a personal statement.
During the Committee stage of the Coal Industry Bill on Thursday, 2nd December, 1965, the hon. Member for Derbyshire, North-East (Mr. Swain) made the following statement regarding myself:

I wonder if his constituents are aware that his attendance record in this House is only 60 per cent.—if he challenges that I will prove it to him—and his absenteesism in this House is 40 per cent."—[OFFICIAL REPORT, 2nd December, 1965; Vol. 721, c. 1694.]
Mr. Speaker, since that statement I have checked my Division record. In the 1964–65 Session of Parliament I voted 225 times out of a total, which included non-Government free votes, of 276, with normal pairing arrangements, where appropriate, accounting for the balance. In the current Session of Parliament I have voted 11 times out of 11 votes. I can also provide evidence to prove that my attendance in the House is consistently frequent, very considerably in excess of that indicated by the hon. Gentleman's remarks.

Hon. Members: Withdraw.

Mr. Speaker: Order.

Sir R. Dudley Williams: On a point of order.

Mr. Speaker: Order. The Chair is on a point of order at the moment. Personal statements are usually heard in silence and without any comment. Point of order—Sir Rolf Dudley Williams.

Sir R. Dudley Williams: Thank you, Mr. Speaker. I must apologise to you for drawing attention to a point of order while you were standing. May I draw your attention to what I suggest, subject to your views, Mr. Speaker, is an abuse or breach of privilege? The hon. Member for Derbyshire, North-East (Mr. Swain)——

Mr. Speaker: Order. I will not hear any more. The hon. Gentleman is beginning to comment on the issues raised in the personal statement. He cannot do that.

Mr. Michael Foot: Further to that point of order. Could you tell us, Mr. Speaker, what are the precedents for statements being made in the House by Members on their general Division records, including statements about pairs that they may have had or not, which presumably are a quite unofficial matter and not concerned with the rules of the House?

Mr. Speaker: The hon. Gentleman would not expect me to give at a


moment's notice the number of precedents in which hon. Members defending, if one likes, their character have produced their Division records. I make no comment on the personal statement. I am bound by the same rules as the rest of the House.

Mr. G. Elfed Davies: Further to that point of order. When my hon. Friend the Member for Derbyshire, North-East (Mr. Swain) attacked the hon. Member for Cardiff, North (Mr. Box), he did so because of the hon. Member's persistent attack——

Mr. Speaker: Order. I know that this is difficult. The rule about personal statements is absolute. They are heard and no observations can be made on them.

BILL PRESENTED

ENTERTAINMENT CLUBS

Bill to empower local authorities to require safe and hygienic conditions in entertainment clubs; to authorise the registration of such clubs by local authorities and the exercise of powers in connection with such registration and for connected purposes; presented by Mr. R. Gresham Cooke; supported by Mr. Henry Brooke, Mr. Percy Holman, Sir Anthony Meyer, Mr. Michael English, Mr. James Dance, Mr. Harold Lever, Mr. John Tilney, Mr. Eric Lubbock, and Mr. Garrow; read the First time; to be read a Second time upon Friday, 28th January and to be printed. [Bill 49.]

LOCAL GOVERNMENT (GENERAL GRANT)

3.56 p.m.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James MacColl): I beg to move,
That the General Grant (Increase) Order, 1965, dated 29th November, 1965, a copy of which was laid before this House on 1st December, be approved.
The circumstances which led to the Order being made are outlined in the Report which accompanied it, House of Commons Paper No. 9.
General grant increase orders are not new to the House, but it may still be helpful to describe how they arise. The grants are settled by a principal Order for a period of two years on the basis of forecasts of expenditure on general grant services for the period at constant prices. It is not permissible and usually is not practicable for the main Order to allow for the possibility that the level of prices costs and remuneration may go up during the grant period. Where the level does go up and in the opinion of the the Minister the resulting extra costs are more than local authorities can be expected to bear unaided, an increase Order may be made to give them more grant. This has happened in every grant period so far.
The current grant period is the two years from 1st April, 1965, and the original grant for these two years was settled last autumn by the General Grant Order, 1964, which the House approved on 15th December, 1964. The Order was accompanied by a Report—House of Commons Paper No. 36—giving estimates of relevant expenditure of £1,246·45 million for 1965–66 and £1,338·56 million for 1966–67, on which the Order provided grants of £680 million and £731 million.
Since then the level of prices costs and remuneration affecting the general grant services has risen, the largest item of increase being the recent pay awards to teachers. These account for about two-thirds of the total increase in estimated expenditure. The main increases taken into account, which total £96·45 million in 1965–66 and £105–18 million in 1966–67, are set out in the Appendix to the Report, which also shows how these increases are shared between the various services.
In considering the increased expenditure for grant purposes, it was necessary to remember that the income of local authorities would go up as well by over £2 million a year through higher charges for welfare accommodation.
The amount of grant justified by the increased expenditure has been calculated by the method used for the main Order. This produces for the local authorities which receive general grant additional sums of £52 million in 1965–66 and £57 million in 1966–67. They are to be distributed without any changes in the pattern of distribution; the weightings for the factors in the formula have merely been scaled up so that each factor produces the same proportion of the total grant as it did before the increase.
The estimate of increased expenditure were arrived at in consultation with the Association of Municipal Corporations, the County Councils Association, the London Boroughs Committee and the Greater London Council. I am happy to be able to tell the House that the associations and the Departments concerned reached agreement for the most part. The only question on which a difference arose was the bid by the Greater London Council and the London Boroughs Committee for a special addition to Greater London's share of the increase in grant. What the claim amounted to was, in effect, a request for an additional £½ million of grant, or rather under a ¼d. rate, for the Greater London area. They claimed that this was needed to allow for higher costs peculiar to the area, in particular for the higher administrative costs attributed to the reorganisation of London government which had been underestimated in the negotiation on the main Order.
My right hon. Friend was able to meet the associations and hear the views of the London authorities about this, but he was obliged to tell them that it was not a matter which could properly be dealt with in an increase Order. An increase Order is not meant to correct underestimating in the expenditure for the main Order. Nor would it be right to consider the Metropolitan factor, or indeed any single factor in the distribution formula by itself. The formula is in the nature of a package deal affecting the interlocking interests of all local authori-

ties receiving general grant and has to be looked at as a whole.
There have been many requests for changes in the formula but a general overhaul promised in 1962 was superseded by the last Administration's wider proposal to review local government finance—it was agreed last year that there should be only consequential changes in weighting—and it would be still less appropriate to try to change the formula now on an increase Order when this Government are preparing to bring forward next year proposals to reshape the grants system. Consequently, my right hon. Friend had to ask the London authorities to put up with the present grants system with all its faults a little while longer.

4.2 p.m.

Mr. Boyd-Carpenter: The Joint Parliamentary Secretary to the Ministry of Housing and Local Government has described with his customary fluency the rather curious machinery for the making and variation of these grants, but, perhaps understandably, he did not bring out in the course of his speech the gloomy prospect for the ratepayers which lies behind these figures.
Paragraph 4 of the Explanatory Memorandum which accompanies the Order brings out very clearly both the extent to which local authority expenditure is surging upwards and the comparatively modest contribution towards it which this Order makes. The figures are ones which concern the House, as they certainly will concern opinion outside.
Reckonable expenditure for the current year, 1965–66, was estimated a year ago at £1,246,450,000 and it is up according to the Memorandum by £96,450,000 to the formidable total of £1,342,900,000, and for 1966–67 it goes up from £1,338,560,000 by no less than £105,180.000 to a total of £1,443,740,000. This Order—and I do not think that the Parliamentary Secretary said this—by following meticulously the 55·1 per cent. formula, allowing for the adjustment to which he referred in respect of additional income for welfare homes, means a further large increase in rate-borne expenditure. It means that the ratepayers will have to find out of these increased amounts the remaining 44·9 per cent.
This Order afforded to the Government the last opportunity to do something to help the ratepayers next year, and this opportunity has pointedly not been taken. Next month the finance committees of the local authorities will begin their consideration of the rates which they will have to recommend to come into effect next April. They will have to do so against the background of an Order which, by following meticulously the 55·1 per cent. precedent, and leaving this further large expenditure to be carried by the rates, and by doing nothing progressive or constructive to deal with the emerging rate problem, will leave every one of these committees faced with gloomy decisions about the amount by which it will be necessary for them to increase their rate poundages.
The right hon. Gentleman the Minister of Housing in a note circulated in connection with the Rating Bill on 26th November forecast an increase in the rates next spring on average of 10 per cent. As usual, the right hon. Gentleman was optimistic. I will hazard a guess that, with the wage-price inflation now taking place and the high cost of what local authorities have to buy, and the continuing high rate of interest which they have to pay, the figure is more likely to be close to the 14 per cent. increase over the previous year which we met this April.
This Order does nothing whatever to tackle that situation in which, except for the 2 million ratepayers who will benefit in small measure from the Bill now before the House, the rest of ratepayers are faced with a prospect of that sort, accentuated by some of the provisions of the Rating Bill whereby they have to pay a proportion of the rates of the people who benefit from that Bill. This will be the last straw for a great may people, and all we can get from the Parliamentary Secretary is hints about some grandiose alternative for the rates when we know perfectly well from no less a person than the Prime Minister that no such alternative is in sight or has been considered.
This Order conspicuously and pointedly makes no attempt to give that early relief to ratepayers which was promised in the present Government's election manifesto. The Government make no attempt to transfer to the taxpayer a share of the burden which falls

on the rates, a transfer to which hon. and right hon. Members opposite expressly pledged themselves 18 months ago. We cannot amend the Order—on this occasion the Parliamentary Secretary does not even have to shelter behind a tightly drawn Money Resolution—and to reject the Order would simply add to the rising burden on the local authorities. But at least we can make clear on the Order where the responsibility lies for the swingeing rate increases which the country faces next April. It has been suggested in the Press that hon. and right hon. Members opposite will go to the polls in March. I will give them one additional argument for doing so. They had better do so before the ratepayers discover, when the rates for next April are presented, how they have been deluded by hon. and right hon. Members opposite.

4.10 p.m.

Mr. Julian Snow: I was fascinated by the concluding remarks of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), because, of course, all the country knows that what we are now having to face is the direct consequence of policies pursued and action taken by his Administration. However, I rise to make a more constructive point.
My hon. Friend will recall that, some nights ago, the House accepted what I regarded as a misbegotten Order relating to the West Midlands Special Review Area, under the terms of which Staffordshire was truncated and a large slice of the county was taken away to form five new county boroughs. Consequentially, the revenue of the county of Stafford will decline subsequent to April next by about one-third, and another consequence is that, at the very minimum, there will be a rate increase in the residue of Staffordshire of about 6d. I speak of a minimum increase because, although it will, in fact, be considerably more, the five new county boroughs are being asked to shoulder any excess over 6d., a prospect which they view with less than enthusiasm.
In this Order, what weighting has been attached to this problem of Staffordshire in its truncated form, and what special provision will be made to tide it over what must be a very difficult period when overheads will not be reduced but when the consequential financial provision must be met somehow?

4.12 p.m.

Mr. James Allason: The general grant is based on the proportion of, roughly, 55 per cent. of expenditure provided by the taxpayer against 45 per cent. raised by the rates. This has been the proportion for a number of years, since the principle of the general grant was introduced, but there is nothing sacrosanct about the 55 per cent. There is nothing whatever to prevent that proportion rising so that a greater proportion of expenditure is met by the taxpayer.
I made this point in a similar debate last year, on 15th December, and I asked that the general grant should be increased in order to meet the severe rise which would otherwise take place in householders' rates. The answer I then received was rather encouraging. The Minister said:
… we have not excluded the possibility of a major change in the division of financial burden between central and local government before 1967–68."—[OFFICIAL REPORT, 15th December, 1954; Vol. 704, c. 225.]
I hoped, therefore, that something would be done this year, and it is most disappointing to find that precisely nothing has been done in this Order. However, this was foreshadowed on 6th December when the Under-Secretary of State for Scotland explained that it would be too expensive. Giving reasons why the proportion of the general grant could not be raised, he said that it would be a terrible burden on the taxpayer. Yet this was precisely the pledge on which the party opposite was elected. The Labour Party's election manifesto told the country,
We shall seek to give early relief to ratepayers by transferring a larger part of the burden of public expenditure from the local authorities to the Exchequer.
Now, they say that they cannot do it because it is too expensive. The hon. Gentleman's actual words, replying to a point made by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), were:
The right hon. Gentleman argued a case which I thought was quite extravagant when he said that we in the Labour Party had an opportunity to get early relief by increasing the general grant to cover the whole amount of the rates increase in any one year—in our last year, over 13 per cent. If he looks at that he will see that there are two enormous objections to doing so"—[OFFICIAL REPORT, 6th December, 1965; Vol. 722, c. 163.]

I shall not weary the House by reading further, but the gist of his two objections was that it would cost the taxpayer more money. That is exactly the opposite of his party's election pledge.
The rate increase last year was very nearly 14 per cent. The Minister has already forecast that it will be 10 per cent. I am not sure whether that includes or excludes the additional 1 per cent. which is bound to arise from the operation of the Rating Bill, and, as my right hon. Friend the Member for Kingston-upon-Thames said, it may be not 10 per cent. or 11 per cent. but as much as 14 per cent. if we take into account the increases in costs which are likely to arise in the near future.
It is extremely disappointing that the Minister of Housing and Local Government is unconcerned about what is happening. In the debate on the Rating Bill, he took the line that ratepayers should expect rate increases. He said that rates would inevitably go up and it was, therefore, quite reasonable that a further burden should be borne by better-off ratepayers so that poorer ratepayers could have some relief. That was his argument to justify the way that the rate demand consequential upon the operation of the Bill would have to be borne.
If the right hon. Gentleman looks at his words again, he will find that they express a fairly light-hearted approach to the whole subject of rate increases. I agree that he said that the whole rating system should be abolished, but he did not tell us what would be put in its place. It is intolerable that the Minister should be so unconcerned about rate increases of this kind, 14 per cent. last year and, possibly, 14 per cent. in the coming year. It is a complete denial of his party's election pledges, and his reaction is to say, "Let us abolish rates". Here was the opportunity to do something to keep rates at a reasonable level. This is almost the biggest increase we have seen in the costs borne by ordinary people. I wish that it could be sent to the Prices and Incomes Board for that Board to determine whether it is fair or not.

4.18 p.m.

Mr. Oscar Murton: The Minister ought to recognise that a greater proportion of the constantly mounting


burden of local expenditure must be met by a rise in the general grant. The entirely new set of circumstances opened up by the Rating Bill add further force to the argument. Under that Bill, all ratepayers other than the 2 million who, it is estimated, will qualify for rebate, will have to find an extra £9 million a year, that is, £7 million in rebate plus £2 million in administrative costs. Through this legislation, the Government are acting quite contrary to their party's election manifesto which told the electorate that Labour would seek to give early relief to ratepayers. The question which springs to mind is, "To all ratepayers?". The answer must be, "No, just to some".
I agree that there has been and remains a cogent need to give relief to certain classes of ratepayers. But the Rating Bill does not go far enough.
I give an instance in the predicament of what might well be called a typical South Coast town. It is my own constituency of Poole. The domestic rateable value nationally forms about 48 per cent. of the total rateable value, but in my constituency it is 64 per cent. The national average of members of the population over 65—many of whom one would expect to qualify under the new legislation—is 12 per cent., but in Poole it is over 16 per cent. Poole, which is not yet a county borough, bears a disproportionate amount of Dorset County Council's precept so that 29 per cent. of the county's population pays 38 per cent. of the rates.

Mr. Speaker: Order. Is the hon. Gentleman suggesting that the problem he is putting can be solved in some way either by not accepting or by accepting the proposed increase in the general grant?

Mr. Murton: I apologise, Mr. Speaker. However, I was elaborating my argument to that point.
This situation is not unique to Poole. But it is cogent argument for increasing the General Grant Order next year. The rates this year under the Labour Government have risen 14 per cent. and, on the Minister's own admission, the burden will rise by a further 10 per cent. next year. My right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), who is not in the habit of exaggerating, suggests that the rise will be

at least 14 per cent. next year. With all humility, I agree.
We are assured that the Government are working actively on a new form of tax, but I was astonished when, as late as 9th November, the Prime Minister expressed the pious hope that someone would stumble some day on an alternative method of raising local revenue. I can quite understand that the word "stumble" was somewhat infelicitous, but we on this side of the House could not have found a more appropriate and descriptive phrase for all the activities of the Government. I can see no reason why the general grant could not have been increased this year in order to alleviate the problem facing ratepayers throughout the country.

4.23 p.m.

Mr. Peter Mahon: Having spent a long time in local government, I still think it is prudent to say that, in the last analysis, the services that local authorities render are the acid test and not the amount of rates levied. I think that the general consensus is that rates are a positively good value. They are particularly good value where the services are good and sound and equitable from all points of view.
It would be a very ill-advised person who would say that education is not splendid value or that we are not getting good benefit from the vast amount of money being spent on it. Education on an ever-increasing scale is being given to our young people at a price of less than one large packet of cigarettes per week per person, and it is a very creditable business. In the wildest stretch of imagination one could not say that such an average cost is too much to pay for the education service.
One can go through the list of other local government services and find similar value—the health services, the social services, housing and all the multifarious other services. One could not, with the wildest stretch of imagination, say that we are being asked to pay too much for the services rendered.
However, I am pleased that there is to be some easement under the new provisions for those who are less able to pay. I agree that certain people are gaining more benefit from local government expenditure than others. People


with children are getting tremendous benefit from education, and it is these who are willing to pay and do pay without disagreement. But it seems rather unfair and unjust that older people on restricted incomes, who either have had no children or whose children are now grown up and who thus receive no benefit from the education service, have to pay formidable sums in rates as their income reduces.
This is where the shoe pinches most, and it is here that the easement is to be given by the Government. That is a very good advance. We must remember that so many of our fellow human beings are deprived of the benefits of decent housing—and the greatest imposition that can be placed on any family is denial of decent living conditions. Yet many are so deprived despite the fact that they are earning good wages or equitable salaries.

Mr. Speaker: Order. The hon. Gentleman is getting a little wide of the Order.

Mr. Mahon: I bow to your Ruling and apologise, Mr. Speaker.
There are many inequities and ambiguities in the manner in which the rates are levied. That has been a bone of contention throughout the years. It is high time that these difficulties were evened out and that people recognised what they are invited to pay for. We have had the block grant, which permeated the local government system for so many years. Then there was a change to the general grant and the deficiency grant, but people, because of the intricacies of local government and the manner in which the grants are decided and levied, have not been able to understand for what and why they have been asked to pay.
It is high time that the people were in the position of being told by local government officers that they are paying for services rendered. In my experience, however, people have not known and have not understood these difficulties. Indeed, borough treasurers themselves are at a great loss to be able to explain to local government representatives the intricacies of the system. These are difficulties which must be faced by those responsible for future legislation. They must decide upon and bring in an easier

and more equitable system. But it would be a tragedy if we were to say, in season and out, that the rates system is iniquitous. From many points of view, it can be considered fair and equitable. It is not an iniquitous system if the people are receiving good service in return. Many progressive authorities give such good services that their rates are good value for money.
I do not share the despair of some of the prophets of gloom who have spoken this afternoon. I do not agree that education it not good value. I take the view that there must be some improvement in this connection. Teachers and others responsible for the progress of education are worth a better deal, and I think it is generally agreed that teachers, especially younger teachers just entering the profession and taking home less than an average dock labourer's wage, should be better paid. These are the inequities in our rating system.

Mr. Speaker: I am not criticising anything the hon. Gentleman has said, but we are now discussing whether we shall increase a certain grant to local authorities, or should have increased it by more or indeed less. That is the issue which hon. Members must debate.

Mr. Mahon: I would not object to a greater addition to the general grant to make local authority services more equitable. I do not believe that people are being charged too much for local authority services. They would only have to suffer the discomfort of spending a fortnight without having their dustbins emptied to be willing to pay a private person any money to do it for them. The advantages of local government services are so tremendous that they are apt to be overlooked. If people recognised those advantages more, they would be more anxious to improve the system and to pay more to extend the wonderful services which have been provided by local authorities from time immemorial.

4.32 p.m.

Mr. A. E. Cooper: I have only two comments to make about the speech of the hon. Member for Preston, South (Mr. Peter Mahon). First, he must not run away with the idea that the Order is in any way selective, that it will help the individual ratepayer, as


he seems to suppose. All that is happening is that in deciding the amount of general grant to an authority regard is to be paid to the numbers of children or the numbers of old people in the area concerned. An area with more of either, or both, will benefit to that extent, but it will still be for the local authority, as it has always been, to decide how to disperse the amount. The authority will not be able to give some benefit to Mrs. Brown, who has five children, because Parliament has passed this Order. I hope that the hon. Gentleman will disabuse his mind of that misapprehension.
Secondly, his idea that ratepayers do not know what they are paying for is fanciful in the extreme. Every local authority has laid upon it by law the obligation to print on the back of the rate demand complete details of all the services it renders together with their cost. If the hon. Gentleman has never seen his rate demand, when he gets home this evening he should take a good look at it. He should not take the view that ratepayers are not aware of what services are provided and at what cost.

Mr. James Tinn: Would not the hon. Gentleman agree that the many people who are council house tenants and whose rates are deducted automatically do not receive those details?

Mr. Cooper: That is so, but the information services provided by the average authority are sufficient to deal with that, unless we want local authorities to bear the additional cost of delivering a pamphlet on rates expenditure to all council house tenants.
The Order can be regarded only as a fraud. In no way does it seek to deal with the problem of the excessive burden of rates, and it does not in any way fulfil the promise of the Labour Party at the General Election. It is the second Order of this type which the Government have introduced in 12 months. This is an example of the Labour chickens coming home to roost. This increase has been brought about by the Government's gross extravagance in the past year. The high Bank Rate of 6 or 7 per cent. has cost local authorities in this financial year and will cost in the next financial year many millions of pounds which already sorely pressed ratepayers will have to find.
The Order is not introduced to provide for any advance in social services, but simply to meet the cost of the burdens thrust upon local authorities by the impecunious and profligate Government. I suppose that the Minister will tell ratepayers, "We have come to your aid; we are introducing a Bill to provide £29 million to help ratepayers and it will benefit about 2 million ratepayers". That is true, but the 2 million who are to get some relief are not all those who need relief from the payment of rates.
For example, in my constituency there is a very large proportion of elderly people living on small business or Service pensions and owning their own homes. They are beyond the limits laid down in the Rating Bill, but they get a clout in the ear every time the rates go up and they can do nothing about it. They receive very few services from the local authorities. It is true that they have probably bad children who benefited in the past, but now these people are over 65 and have just sufficient to get by.
The Government now come along with a 14 per cent. increase in rates this year, which for these people means having to find £7 or £8 a year. That may not seem very much, but it is 140s., or roughly 3s. a week, and that on top of the decline in the value of money in the last 12 months and the higher cost of living means that these people are really feeling the pinch, and they are the people whom the Government are not helping.
That is why I say that the Order is a fraud perpetrated on the electors following wild and extravagant claims at the General Election which gulled the electors into believing that the Labour Party would do something for the ratepayers. It sounds nice for the First Secretary, or the Chancellor of the Exchequer, or the Minister of Housing and Local Government, to say, "We have increased the general grant this year by £57 million or thereabouts"—until one considers the other side of the story. It might gull a few people in Kingston-upon-Hull, North on 20th January, but it will not gull anybody after the next rate demands go in. That will be the moment of truth for the Government.
When the comparable Order was introduced about a year ago, we were highly critical of the Minister's approach to the problem of rates. His complaint then


was, "I have been in office for only a few weeks and I have not had time to deal with the problems". He has now had time, and if this is the best that he can do he ought to do time.

4.40 p.m.

Mr. A. P. Costain: I realise that this debate is restricted, but I want to make one main point to the Parliamentary Secretary. If my constituents could have seen him laughing when the question of excessive rates was raised by my hon. Friend the Member for Ilford, South (Mr. Cooper), they would have been shocked. I can assure him that, in my constituency, rates for those people to whom the hon. Member for Ilford, South referred, those people just above the income group for whom the miserable Rating Bill was brought in, are the most sorely hit. I had hoped to give these people some hope when this General Grant (Increase Order) came out. I thought that even a Labour Government would try to keep promises and would make some contribution from the general grant to help these people who are getting £11, £12, £13, a week and who are not covered. It was a great disappointment when this Order came out to find that there was no attempt to make any general relief.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Robert Mellish): As the hon. Gentleman is making such an attack upon the Labour Government for this increase in rates, may I ask what he said when rates rose astronomically during the last Tory Government? Did we have such sickly stuff then, or is this just humbug for the occasion?

Mr. Costain: I can assure the hon. Member that this is not humbug. If he would come to my constituency and see some of the pathetic cases, he would know it was not humbug. It is a fact. Rates did not rise to the same degree during the last Tory Administration as they have done under the present Government. The Parliamentary Secretary has made no attempt in introducing this Order to explain why he has not given more from the national Exchequer. Could he not get some from the Treasury? Hon. Gentlemen opposite have talked about the value of money. There are plenty of things

in the shops which are value for money but which people just cannot afford. This is a "take it or leave it" Order and I say without any humbug that my elderly constituents cannot take such an increase. Something must be done.

4.45 p.m.

Sir Douglas Glover: If there has been any humbug spoken in this House, it has come from the party opposite, which produced an election manifesto and told the public what it was going to do for the ratepayers and then brings in this Order. I think that this is about the bitter end of Parliamentary controversy. This is an Order which is not helping the ratepayer because the ratepayer is faced with a large increase in his rates next year, contrary to all the promises made in the Labour Party's manifesto and in election addresses, about how it was going to take the burden off the rates and place it on the national Exchequer. The sum total of their promise is to bring in a fiddling little Bill, dealing with 2 million ratepayers, which puts the rates up for the other 18 million. That is a wonderful piece of progressive machinery.
Of course it helps the 2 million, but as my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) has said, the next 2 million are very nearly in the same plight and their rates are going to go up to pay for the first 2 million. So this is a well-thought-out Measure. We are not dealing with the Bill here, we are dealing with the Order, and we cannot vote against it. It is one of those things that has to be put into operation, otherwise the poor ratepayers will get no help. It is one of those things which we have to allow to go through the House, but I think that it needs to be placed on record that this Order is real humbug compared with what the Government said when they appealed to the electorate 14 months ago.

4.47 p.m.

Sir Stephen McAdden: I want to add a small point in support of what has been said by many of my hon. Friends. I noticed that the Parliamentary Secretary was getting very excited and talking from a sedentary position about 13 years. Let us also remember that, 13 years of Conservative Government or not, the fact is that he and his party have been in power now


for over 12 months and they have signally failed to redeem their promises made to the ratepayers. Whilst the explanation might be when they first came into office that they had been there only for a matter of weeks and that it was then impossible for them to prepare the legislation which they had in mind, may I remind the Parliamentary Secretary that while the Conservative Government were in power for 13 years the present Government were in opposition for 13 years? During the 13 years they had far more time to devote to an intimate and close study of this problem, so that when they came into power they ought to have had their plans ready, otherwise we are getting back to the position which arose in the first Socialist Government after the war when, having preached the gospel of nationalisation year in and year out, they had to admit, through the mouth of the right hon. Gentleman the Member for Easington (Mr. Shinwell), when they got into power, that they had never devoted any serious thought to the problem.
This is a two-way argument, and it is all very well to talk of 13 years of Conservative rule. There have been 13 years of Socialist opposition when they could plan for the time when they came into power. It might have been a shock, perhaps they would not have come to power if it had not been for the intervention of other factors, but they cannot dispute the fact that they had these 13 years in which to prepare their plans. It is no good coming to this House 12 months or more since they came to power and saying that they still have not arrived at a position where they can be more generous and give more openhanded help to the ratepayers, help which they so freely promised when they were in opposition and at the time of the General Election.
Among the important factors which have been brought out by my hon. Friend the Member for Ilford, South (Mr. Cooper) were that a great deal of the current burden upon local authorities is a direct result of some of the actions which have been taken by the present Government and the fact that interest rates have continued at a very high level. It is a level at which they have not been for a very long period, a longer period than ever before in our history. Surely this has placed an intolerable burden upon local authorities, about which the

Chancellor and the Minister really ought to do something.
This General Grant (Increase) Order does nothing whatever to help local authorities in this matter. There may be an attempt to make some contribution to the enormous extra expenditure which has been placed upon the ratepayers' shoulders, but it is time that the Government woke up to the fact that high interest rates at present payable by local authorities stem directly from the increased Bank Rate which this country is called upon to bear and that they have a very serious responsibility in this matter, not only to the people as a whole, but particularly to the ratepayers.
It is not fair to run away from serious arguments such as were advanced by my hon. Friend the Member for Folkestone and Hythe (Mr. Costain), and my hon. Friend the Member for Ilford, South, who have pointed out that there are large sections of ratepayers, in areas of the country where there are a large number of retired and old people, who feel this continual pressure of rising rates very severely indeed. I hope that before long this Government will go further to meet the obligations into which they entered when they became a Government and redeem the promises which they made at the last General Election.

4.49 p.m.

Mr. Graham Page: I would call the attention of the Parliamentary Secretary to the fact that attacks on this Order have not been only from this side, and I welcome the support of the hon. Gentleman the Member for Preston, South (Mr. Peter Mahon), who has very great experience in local government service, not in Preston but in the constitutency neighbouring my own, in Bootle. We shall welcome him back there, when he loses his seat at Preston, because we have heard only today that Crosby is absorbing Bootle under the recommendations of the Boundary Commission.

Mr. Peter Mahon: Is the hon. Gentleman not sure that it is Bootle absorbing Crosby?

Mr. Page: That is why I put it round that way. He pointed out that he, at any rate, wanted to see a greater addition made to the general grant than had been


made in this Order. Indeed, everyone in the House, even hon. Members opposite, would have liked to see greater relief given to the ratepayer by a greater amount of general grant in this Order.
The general grant has doubled since it was initiated seven years ago. It was £393 million then. In 1966–67 it is to be £788 million.

Mr. Mellish: Hear, hear.

Mr. Page: It has increased by a substantial amount in the last 12 months, but it is the last 12 months with which we are dealing in this Order.
The hon. Member for Lichfield and Tamworth (Mr. Snow) endeavoured to say that the Order was due to what the Government had inherited from the previous Government. But we are dealing with the last 12 months, because the previous Order was made in. December 1964 exactly 12 months ago. Section 2(4) of the Local Government Act, 1958, provides:
If it appears to the Minister that during any grant period any unforeseen increase has taken place in the level of prices, costs or remuneration, and that its effect on the cost of providing the services giving rise to relevant expenditure is of such magnitude that it ought not to fall entirely on local authorities,
he can bring forward an Order such as this. One assumes that the Minister, in December 1964, when the Government were complaining about what they had inherited from the previous Government, could not foresee the increases for which he is making provision in this Order. They have come about entirely in the last 12 months. The Joint Parliamentary Secretary, in introducing the Order, said that they were mainly caused by teachers' salaries. Indeed, we see that in the figures set out in the Minister's report accompanying the Order. But the increases are very substantial, and the Minister should not have brought forward an Order of this sort before making some reform in the rating system by transferring some of the burden to the taxpayer from the ratepayer.
What about teacher-training, grants to students, advanced further education, Class I and II roads, the administration of justice and civil defence? All those things, which are national and not local

services, could well be passed over to the Exchequer before bringing forward an Order of this sort. It is true that this might have saved the rates only a matter of a copper in the "bob", which, although it sounds a small sum, amounts to about £100 million; and £100 million of rate burden can be a substantial amount when brought down to the individual ratepayer.
All that we have been told today is that no further relief is to be given to the ratepayer. This Asquithian Minister of Housing and Local Government says, "Wait and see. I am preparing some nice dish for the ratepayer. I have in mind next year some Bill to revise the rating system. I have not a clue what it will be. I do not know what I will put in place of rates. I am going to abolish them, and you must wait and see". He has trained his Parliamentary Secretaries to turn all Members into Bisto kids, sniffing at the tasty morsel which he will bring forward some years hence. This is not good enough. Here and now it means a further large increase in rate-borne expenditure, because the Minister has not coped with things properly in the Order. He has not attempted to present legislation to amend the rating system.
This is a complete failure to carry out election promises. Phrases used by Members opposite have been quoted today, and they cannot be denied. Even in the sober atmosphere of the Queen's Speech, let alone at the hustings, we were told that there was an intention to limit the burden of rates. This Order does not limit it. It increases the burden on the ratepayer, and, to that extent, it represents a complete failure of the Government to carry out their pledges.

4.55 p.m.

Mr. MacColl: Right hon. and hon. Members opposite have a terribly bad effect on me. Whenever I come to the House to discuss local government finance and rating, I always make a vow that I will not refer to the past 13 years. Whenever I hear them speak, they talk such nonsense that it is quite impossible to look at this matter in any kind of perspective without referring to the fact that we have inherited a structure of local government finance which is extremely rigid and which we have to try to make work.
It is said that we have done nothing to meet the problems of local government financing during the time that we have been in office. I do not want to expand on this, because I do not wish to get out of order, but, as the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) well knows, on Thursday we go into what I am sure will be a very short Committee stage to discuss the biggest undertaking ever to ease the burden of rates on the very people about whom we have had crocodile tears this afternoon. Small ratepapers will have immediate and flexible relief, not the rigid, unworkable system that was dumped on us by the last Government in their dying moments.

Sir S. McAdden: Surely the hon. Gentleman appreciates that this is not the first Socialist Government that we have had. We had one from 1945 to 1951. They had six years to find out what the unworkable local government system was like. It was no different then from what it is now.

Mr. MacColl: On the contrary, it was very different. The hon. Gentleman has forgotten that we introduced the Exchequer equalisation grant and we had a much more flexible system to keep the burden of rates off the poorer local authorities. Since then, so far from the system having become better, it has got more rigid. That is our trouble. So much for the immediate short term, dealing with relief to the poor ratepaper, not the year after next, but in the next financial year.
We are to discuss in the House tomorrow—again I must not anticipate—a Bill which will give far and away the biggest central Government help to housing ever given by any Government. That will come into operation as soon as the arrangements are made. [Interruption.] Before the hon. Member for Ilford, South (Mr. Cooper) joins his hon. Friend the Member for Ormskirk (Sir D. Glover) by leaving the Chamber when I am discussing these points, I would mention to him that that Bill deals with the very problem of interest rates to which he referred. It gives precisely what he is asking for, which is a steady rate of interest and an assurance to local authorities that, while there is a Labour Government, they can build at 4 per cent. I

should have thought that that was something well worth having.
I come back to the one thing which is rigid, and that is the operation of the present general grant, which, as hon. Members opposite do not appreciate, is something we inherited under the Local Government Act. We have to bring in these Orders every two years. We have to bring in the supplementary Orders. This is not due to our profligacy. It is due to the fact that every year there has been need to supplement the general grant because of the increase in expenditure. It is not something new.
This is not basically due to increased rates of interest. Rates of interest account for about £4½ million. But three-quarters of this is in respect of teachers' salaries, grants to students and increased grants to school children. If we are to be indicted for spending money on these things, it is something for which we happily accept responsibility. That is precisely what somebody said it was not. It is a development of the social services. It is the provision of a better educational system. That is nothing of which we need be afraid.
Among the detailed points of comment which have been made, my hon. Friend the Member for Lichfield and Tamworth (Mr. Snow) asked about how the grant affected Staffordshire, which had been cut in half by the Special Review Order. That illustrates the difficulties under which we are operating, because there is no conceivable way under the Act in which we could adjust our working to help an individual authority like that. Under the general grant, we cannot help an individual local authority. There is, on the one hand, money which is added on to relevant expenditure in total and, on the other hand, money allocated in grant according to a rather complicated formula. Help in that direction, therefore, would have been quite impossible.
There are only two ways in which Staffordshire could be helped. One would be under the rate deficiency grant if it qualified and the other would be by special grants made to it by gaining authorities under the Order. That was recently done, as the House will remember, having discussed the matter at a rather late hour a few nights ago.
The hon. Member for Hemel Hempstead (Mr. Allason) suggested that my


right hon. Friend the Minister was not interested in the rate burden. I have already shown conclusively that my right hon. Friend is very much concerned and anxious about it and is thinking, not into the future, but of immediately starting a process which will culminate in changing the whole position of ratepayers as regards local government expenditure. We have already produce an earnest of our good intention in this matter and there is nothing about which we need be afraid. It is not our fault that we have this 14 per cent. built-in increase in expenditure falling upon the ratepayer.
The hon. Member for Poole (Mr. Murton) raised the difficulties arising in his area because of the high proportion of domestic ratepayers and the small proportion of industrial ratepayers. That is an arguable point. The hon. Member knows as well as I do that under the Act, it is impossible to find any means of helping an authority which is suffering in that way. We cannot adjust a formula within the Act to do that. Therefore, it only illustrates the rigidity of the existing grant system and the impossibility of helping the hon. Member's local authority.

Mr. Murton: If the direct grant were to be raised, it would help those people, would it not?

Mr. MacColl: The hon. Member cannot have followed what I said earlier. When we raise the grant, we chuck an amount of money into a very large pool. Where it comes out—if I may be disrespectful and talk about such things before the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter)—it is rather like playing a one-armed bandit. One puts in one's sixpence and one never knows what will come out at the other end. There is no means of ensuring that what comes out will go to Poole or that it will get the jackpot.

Mr. Murton: In other words, it is the wrong pool.

Mr. MacColl: It was the hon. Member who made the pun. I should not have dared to make it. That is precisely the difficulty about trying to get out of this rigid system something which would be reasonably flexible.
My hon. Friend the Member for Preston, South (Mr. Peter Mahon) made a good point in saying that we need to remember that rateborne expenditure is something which will give value for money and that rateborne expenditure is something which one sees in the improvement of services, in the improvement of health and in the education of the people. I was glad that my hon. Friend pointed this out, because we get so much into the habit of talking about local government expenditure as if it were a monstrous imposition and something which somehow we must get rid of. It is a wise and fruitful investment in the welfare of the people.
It is true—my hon. Friend made the point very well—that because of the rigidity of the rating system and its unfair incidence, the advantages of local government expenditure do not come back because of the burden which they inflict on certain people. That is precisely what we will be talking about in our Rating Bill on Thursday. It is designed specifically to reduce the load falling not only upon the poorer ratepayer in absolute terms but upon the ratepayer whose resources relatively are limited.
The hon. Member for Ilford, South, who rebuked my right hon. Friend, said that this arrangement was not selective and he called the Bill a fraud. What we are discussing today is not a Bill, but an Order. If it is a fraud, the reason is that we are conscientiously carrying out the legislative system invented by the last Government and which we have to operate until we can substitute a better one for it.

Mr. Boyd-Carpenter: The hon. Gentleman keeps referring to the difficulties of the system which his Government inherited, its rigidity and so on. He was no doubt aware of that system before he came to power. Can he, therefore, explain why, being aware of this, he was not aware of the difficulties which apparently prevent him from carrying out his clear pledge to give early relief to ratepayers?

Mr. MacColl: We are giving early relief to ratepayers. The right hon. Gentleman writhes in agony at the thought that it is the poorer ratepayer who is getting help. That, apparently, is something that he finds intolerable.

Mr. Boyd-Carpenter: The hon. Gentleman is aware that the great majority of ratepayers, including some whom he would certainly regard as being of very modest means, not only get no relief but will get an additional burden from the Bill of which he is speaking. That is what makes me writhe in agony.

Mr. MacColl: Our formula is flexible and much clearer than the formula in the Measure that was passed by the right hon. Gentleman's Government, which was a fraud if ever there was one. A great deal of the burden will be shifted. There is a lot of talk about shifting the rate burden, but a lot of it will be shifted on to the commercial and the industrial ratepayer.
It is worth remembering that one of the great contributions made in the last 13 years by a previous Minister—the right hon. Member for Streatham (Mr. Sandys)—was that he derated commercial properly. He reduced the burden falling upon the commercial ratepayer and put it upon the domestic ratepayer. That is part of the problem that we are wrestling with.

Mr. Allason: The hon. Gentleman has told us that he is fulfilling his election pledge by means of the Rating Bill. Is that intended to be the fulfilment of his party's election pledges?

Mr. MacColl: I am sorry that the hon. Gentleman does not listen to my speeches with rather more care. I have already said that this is the first step in the process and I have mentioned the three measures by which we are taking positive steps to help ratepayers. First, the immediate aim is to help those with small means, and this will be done by the Bill which will come into operation in the next financial year. Secondly, there is the Housing Subsidies Bill and there is then the final comprehensive review of the whole system.
It was only when the right hon. Member for Kingston-upon-Thames ran amok in Blackpool in 1963 that we had a hasty revision of the whole grants system, which produced eventually the extraordinarily feeble mouse of the Rating (Interim Relief) Act, 1964 which his Government produced, and a good deal of discussion of the other points was deferred. We have, therefore, had to

take over the review to get some sense out of it.
I have never pretended that the Order was a major step forward in the improvement of local government finances. It is not. It is an immediate step that was necessary in order to meet the very narrow field of these particular increases of expenditure, three-quarters of which are concerned with education, as I say, and I hope that the House will approve the Order.

Question put and agreed to.

Resolved,
That the General Grant (Increase) Order 1965, dated 29th November 1965, a copy of which was laid before this House on 1st December, be approved.

5.10 p.m.

The Under-Secretary of State for Scotland (Dr. J. Dickson Mabon): I beg to move,
That the General Grant (increase) (Scotland) Order, 1965, dated 25th November, 1965, a copy of which was laid before this House on 1st December, be approved.
The Order arises out of the Local Government and Miscellaneous Financial Provisions (Scotland) Act, 1958, which is the basis of our present local government financial structure. The Act was conceived after four years of diligent work by the party opposite, I am told, and it is within that Act that this Order comes to the surface.
It is an increase Order and only seeks to supplement the General Grant Order which we discussed in the House at this time last year and which was the result of conversations between myself, on behalf of my right hon. Friend, and the local authorities on the figures largely submitted to us by the previous Government.
It may be useful in discussion to reflect a little longer on the nature of the figures that were discussed on behalf of my right hon. Friend by myself and the local authority associations. The figures at that time totalled £80·5 million to £82 million approximately. In fact, from the debate that we had subsequent to that hon. Members will see that the Government suggested figures which were in excess of that, figures which now rise under the increase Order but which at the time we discussed it last year were £80·5 million and, for the year beginning


16th May, 1966, £84·5 million. That represents something like a £2 million increase in the second year, 1966–67, which was covered by the large General Grant Order that we discussed last year over that two-year period.
That was a first attempt by the Government to try and meet the difficulties of what has been described by my hon. Friend the Joint Parliamentary Secretary to the Ministry of Housing and Local Government as a very rigid system which was extraordinarily difficult for Ministers to operate sensibly.
It is true that under the General Grant (Increase) Order we have managed, on behalf of my right hon. Friend the Secretary of State, meeting the three associations, to have these proposals accepted without qualification. In fairness to the local authorities, I ought to say that they have done that because they know that there is more in the Government's mind than simply the present Order or the previous General Grant Order.
Various items in the Order which I shall seek to comment upon are perhaps inescapable, but it is fair to say that the local authorities have a White Paper on housing subsidies and a pledge in the Queen's Speech that we are determined to introduce a large local government Bill which will seek to take us out of the shackles of our present plight.
As for the present Order, as the House knows, the Government are obliged to stick closely to the definition in Section 2(2) of the 1958 Act, which is that we can within this Order, and only that, add unforeseen increases which have taken place in the level of prices, costs or remuneration and the effect of those on the cost of the General Grant services which has been previously agreed for the current grant period 1965–66 and 1966–67.
The local authorities submitted estimates of eligible increases of the relevant expenditure and, as I have said, the three associations accepted the proposal without qualification. In fact, although they were invited by my officials to arrange for a meeting at an elected representative level, the local authorities declined because they were quite satisfied with the grants awarded. While I regret missing an opportunity to meet distinguished local representatives and officials, I gladly pay

tribute to the very fair and reasonable way in which the associations have put forward their case and come to an agreement on the increases in grant. It would be wrong of me not to say that, like good Scotsmen, they were casting their bread upon the waters, and I hope that when the tide comes in they will not be disappointed.
As will be seen from House of Commons Paper No. 10 which accompanied the Increase Order, the biggest individual increases in expenditure are in respect of the employers' share of National Insurance contributions. Other items of individual importance are interest on loans, cost of property repairs and transport. Of increases in wages and salaries, the two main items are those related to manual workers, and nurses and midwives. I am sure that in the general discharge of their duties in relation to local authority services, no one would begrudge them these essential rises in wages and salaries.
There is one item of expenditure on which no increase is shown. Those hon. Members who have witnessed the debate on the English Order might want to contrast the Scottish Order with the English one, and perhaps I ought to offer a short explanation of why there is an apparent omission in that regard in the Scottish Order.
The fact is that teachers in England and Wales have received pay increases effective from 1st April, 1965. That has involved a substantial increase in the General Grant Order which we have just discussed, as the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) has acknowledged. But the pay arrangements for teachers in Scotland, as Scottish Members may be aware, are negotiated independently and the current Scottish teachers' pay agreement covers a period of three years which does not expire until 31st March, 1966.
I regret that within the compass of the present increase Order I cannot join the debate on matters of agitation which are taking place in Scotland at the moment but which no doubt will come out in due course and be discussed later. However, I give my good wishes to any hon. Member who manages successfully to raise the issue on the Adjournment. Any salary increases which result from the present negotiations may have effect from that


day onwards and will be eligible for inclusion in an increase Order next year, should such an agreement be made between the local authorities and the Government. At the moment, we do not know what amounts are involved, so nothing is included in the current order.
I hope that with those explanations, together with my preliminary remarks about how generally it must be looked at in the context of the Government's whole policy on local government finance, hon. Members will commend the Order. If they have any questions, I shall naturally try to answer them.

5.8 p.m.

Mr. Gordon Campbell: As the hon. Gentleman has just said, the increase Order comes forward under the 1958 Act and it is to meet unforeseen increases in prices, costs or remuneration. Presumably it is the grant periods May to May, 1965–66 and 1966–67. It must be based on estimates of increases in expenditure made, presumably, last month as the Order was laid on 25th November.
In the Secretary of State's accompanying report, to which the hon. Gentleman referred, it is made clear that there is a difference between the expenditure to be met in the present Order and the expenditure in the English Order which we have just been discussing. In the English Order there was that very large proportion which was the estimate for the increase in teachers' salaries, and the hon. Gentleman has pointed out that there is no such element in the Scottish Order. Therefore, when his hon. Friend the Joint Parliamentary Secretary to the Ministry of Housing and Local Government was excusing the increase in the English case because three-quarters of it was being spent on the excellent subject of education, that does not apply at all to the Order which we are now considering for Scotland.
When the equivalent Order was considered a year ago, the Secretary of State said:
It means that during the last year of the Tory Government once again prices rose and once again salaries rose."—[OFFICIAL REPORT, 15th December, 1964; Vol. 704, c. 280.]
That indeed was a hostage to fortune, and one of many which are now reappearing, for now the Government are having to propose a much larger

increase in the grant to meet the increases in costs during a year of Labour Government. Most of the extra expenditure now foreseen comprises increases in costs rather than increases in salaries—in fact more than half of the increases for both years.
In the Secretary of State's accompanying Report, the headings include transport, interest on loans, vehicle duty, and postal services. These are telling reminders of Labour's first 12 months in office. Indeed, this Order reflects a rise of 4·8 per cent. in the Retail Price Index during that period, a percentage greater than any over an equivalent period during the previous nine years.
From the figures in the Report one sees that the increased costs for both years amount to about £1½ million, the rest in each case is made up by increases in salaries and wages. If one looks at the previous increase Orders for Scotland since 1958, one sees that there have been some larger ones, but almost all of the amounts in those cases were for teachers' salaries. There was one year, 1961–62, when there was a substantial increase in the rates, but that was connected with the revaluation, as the Secretary of State's Report at the time pointed out. Discounting this exceptional rate increase in 1961–62, the Order which is now before us appears to contain the largest estimate for increased costs since the General Grant was instituted in 1958.
I turn now to some of the items mentioned in the Secretary of State's Report, and to which the hon. Gentleman referred. I propose to deal first with transport. Here the effect is especially felt in Scotland. Presumably this item is composed mainly of increased fuel duty, and the effect is felt in the distances where there are in Scotland larger widespread local authorities. The figures in the Report underline the special effect in Scotland, but, as the increased vehicle duty is shown separately and not under the transport item we cannot see exactly how much transport itself adds up to.
Then there is the item, "Interest on loans". When discussing this subject last year, the 7 per cent. Bank Rate was only three weeks old. Did the Under-Secretary of State think at that time that the 7 per cent. Bank Rate was going to continue for six months, and indeed continue at a high rate after that? The figure of


£410,000 for 1965–66 is a very substantial element in the estimate of increased costs which we have before us.
In that debate a year ago, almost to the day, the Under-Secretary of State tried to make some capital out of the Conservative record on the cost of living. In the previous six years the average increase had been 2½ per cent. a year. In the first year of office, a Labour Government nearly doubled that rate. In particular, the hon. Gentleman said that between 1951 and 1964 the £ had lost about one-third of its internal value. He will remember saying that. He went on to say:
I cannot … pledge that the £ will remain its 20s. value as at 15th October, 1964 …
I congratulate him for once on not giving a hostage to fortune on that occasion, but he then said:
We will wait and see …"—[OFFICIAL REPORT, 15th December, 1964; Vol. 704, c. 320.]
During the year following 15th October the internal value of the £ dropped from 20s. to less than 19s. 1d., and it can be no comfort, to the hon. Gentleman that it is now running at a rate twice that of 1951 to 1964 in reducing its internal value.
This Order is very clearly necessary. It ensures that the total burden of increased costs does not fall on the local authorities in Scotland, but part of the increase falls on them. This system was provided for in the 1958 Act, but it in no way helps the rates. The Order simply tries to catch up with the increase in the costs of local authorities. It does not alter the general position of the ratepayer. Rates continue to go up in Scotland, and the majority of ratepayers there face increased burdens. The question which we put to the hon. Gentleman is whether this increase is enough to cover costs if they continue to rise at the rate of the last few months. The Under-Secretary, if he catches the eye of the Chair, and gets permission to do so, should comment on this before we agree to approve this Order.

5.26 p.m.

Mr. Norman Buchan: I had very little intention of taking part in this debate, but I decided to do so when I entered the Chamber about half an hour ago and witnessed the astonish-

ing scene of hon. Gentlemen opposite frothing and effervescing with false indignation at the rise in general costs. When we were discussing the English Order, the view was expressed that the rise was rather regrettable because of the large amount being spent on education. Now they are complaining because the increased cost of Scottish education is not included in this Order.
I am told that this Order is for the year ending 16th May, 1966, and that the sum of £86,200,000 contains nothing in respect of the increase in teachers' salaries which will be operational by that time and for the year ending at that date. I raise this because of a curious incident which occurred this morning in terms of Scottish education, namely, the leak which appeared in the Scotsman. It seems regrettable that this leak should have occurred at the present time because, for better or for worse, the Scottish teachers had reluctantly accepted the conditions of secrecy. I hope that my right hon. Friend will investigate this leak.
We are told that this Order represents an enormous increase in the grant and that it is necessary because of Government action. The hon. Member for Moray and Nairn (Mr. G. Campbell) is correct. It is necessary because of the increase in National Insurance, in the cost of heating, rent, vehicle duty, postal charges, and so on. Of course a great deal of it is due to Government action, but we cannot allow this to be said without explaining, and if necessary underlining, the reason for this Government action.
We took over a position in which the most irresponsible financial behaviour that has ever been undertaken by any Government in this country was perpetrated throughout the first eight or nine months of 1964. It led this country to run into the red at the rate of nearly £1,000 million over the third quarter, which was the quarter which included the build-up for the General Election. That is the kind of irresponsibility which has led to this increase. In the unhappy event of the Tories having won the election we would not have seen the kind of cushioning consideration such as the Government have given being given to areas like Scotland. When the party opposite faced a similar crisis, there was no cushioning effect in Scotland. Within


three months of what I might call the Lloyd syndrome of 1961 the unemployment figure increased to 136,000.
This was the position with which we were faced. We inherited it from the party opposite, and measures had to be taken to deal with it. Of course the Bank Rate went up. The increase lasted for six months, and it affected local council borrowing. Within weeks of the Tory Government leaving office we had a problem to face, as town chamberlain after town chamberlain came seeking our assistance to borrow money. This was a direct result of the financial irresponsibility of hon. Members opposite. Their English colleagues were frothing with indignation three-quarters of an hour ago. At least Scottish hon. Members opposite have sufficient control not to froth over money.
What has happened is that 12 months afterwards measures are being introduced to deal with the problem. For the first time a concept of a two-tier interest rate is being introduced. For the first time we are beginning to allocate rates in the interests of those sections which need most help. We shall operate them in local council housing, by means of loans for local councils.
We must bear these things in mind when making these minor criticisms of the increase which was caused by the emergency measures forced upon us by the financial irresponsibility of hon. Members opposite. Hon. Members opposite may laugh when I refer to the question of the rating rebate, but this was much protested at by their English colleagues, who do not like the idea of the poorer sections of the community receiving rate rebates. They ignore the fact that about three-quarers of the cost of this will come out of the Exchequer.
It has been said that the increased salaries in education are excellent. Is not the increase in respect of manual workers also excellent? Do not hon. Members opposite want manual workers to receive more when they are directly employed? Are the nurses' and midwives' increases not valuable, and for an excellent purpose? Are not the increases in respect of part-time teachers and for further education also excellent? That was not mentioned. A distinction could be made between the English and the

Scottish Members on the ground of their interest in education.
I expect that when these Orders come before us again there will be a substantial increase. I hope that my hon. Friend and the Secretary of State will recognise the situation that we are facing in Scottish education at present, and that my hon. Friend will take the opportunity of pressing his right hon. Friend to publish the recommendation of the Scottish General Council as rapidly as possible. Conditions of secrecy have led to a general anxiety among those interested in Scottish education, and the kind of discussion and criticism which will arise when the figures are known is much less likely to cause difficulties than the kind of discussions which have been taking place, when nobody connected with Scottish education fully knows the position.
This unfortunate situation has been further worsened by the leak in the Scotsman, and I hope that my hon. Friend will let us have the figures, so that Scottish teachers and other interested parties can work out their policies towards them in an atmosphere of knowledge rather than suspicion.

5.33 p.m.

Mr. Hector Monro: The major point made by the hon. Member for Renfrew, West (Mr. Buchan) seemed to be that hon. Members on this side of the House are not very happy about the increases in salaries of nurses, midwives, manual workers and so on. Nothing is further from the truth. We must accept them because of the incredible rise in the cost of living that has occurred due to the policies of the party opposite.
I will answer the hon. Member's other point, concerning the failures of my party when in office, later, especially in connection with the rate rebates that we have under consideration. Basically, any funds that will relieve the hard-pressed local authority treasurers are welcome and necessary. At the moment their principal worry arises from the fact that they are having to budget ahead not only for next year, but for the year after, and the year after that.
A year ago, when presenting these Orders, the Secretary of State said that he hoped that it would be the last time that he had to do this, and that "by this time next year"—by which he meant this


month—he would have a new system ready. Are we any nearer a decision? Can the local authorities look forward to a change next year or the year after, or shall we go on with the same procedure indefinitely? We all know that education is the major burden of local authorities. Are we going to return to the percentage grant? Will there be any reduction in any educational service grants, or a new rate equalisation grant? All these possibilities are being bandied about, and we are extremely keen to know in some detail when these measures will be presented. Will there be continued help for remote areas and special areas which have exceptionally heavy costs?
The other point that most concerns those interested in education is the grave problem of school building in relation to the raising of the school leaving age in September, 1970. Can the Under Secretary indicate whether sufficient money will be available for building to begin in time? The increases which have been spoken about today are due to the rise in the cost of living, the increased Bank Rate, the cost of borrowing, National Insurance stamps, and road tax, but does any of the money being granted today allow for the increase in rates which is bound to come due to the new Rating Bill?
The administrative cost will fall entirely on the local authorities, and 25 per cent. of the rebate will also be paid by them. It is extremely complex, and a major headache in administration. All this money is coming out of local authority funds, and is bound to cause increased rates. The Government should have given more consideration to the views of the Association of County Councils, and a special body should be set up to deal with this matter.
Has the Under Secretary come any nearer to agreeing with my suggestion, made a year ago, that he might make the 50 per cent. discretionary allowance in respect of rates on amateur sporting clubs mandatory rather than discretionary? This is particularly important on the Borders, where many amateur clubs have to pay rates as high as £200 and £300.

Mr. Deputy Speaker (Sir Samuel Storey): Order. The hon. Member is

getting rather wide of what we are discussing.

Mr. Monro: I am sorry, Mr. Deputy Speaker, but it affects sports clubs considerably in certain areas. I hope that the Minister will give more urgent consideration to this matter than he has done so far.

5.39 p.m.

Mr. John Robertson: It has been quite astonishing to sit here and listen to the hon. Members opposite, speaking as representatives of the party which abolished specific grants and brought in the general grant, which was detrimental to local authority work, especially in Scotland. It has been quite astonishing to hear what they have had to say today and to see the crocodile tears they wept on behalf of Scottish ratepayers. Of course, they have not grasped the essential point about the Scottish position over General Grant Increase Orders, nor about Government grants to Scottish local authorities. They say that the Order deals with a very narrow point—with the increase of the general grant in relation to estimates of additional expenditure, which is completely in line with the Bill which the party opposite introduced.
What it does not deal with—although it is pertinent to the discussion—is the fact that the Scottish Office effectively controls the expenditure of Scottish local authorities and, consequently, controls the amount of the required increase. This is the major point. I see that the right hon. Member for Argyll (Mr. Noble) is present. During his period of office in the last Government he did nothing at all about this very important point. In a comparison of Scottish local authorities with English—we have Orders before us relating to both—the Scottish local authority comes off very badly.
One would have thought, in view of the right hon. Gentleman's enthusiasm for the Scottish ratepayer, that he would have done something, either under a General Grant Order, or a General Grant (Increase) Order, to right the balance and bring the Scottish ratepayers into line with the English. But he did nothing at all. He ignored the problem, as hon. Gentlemen opposite are doing today.
As I listened to my hon. Friend saying that it is the Government's intention to


introduce Measures which will assist local authorities, I thought that mere assistance to local authorities will not be enough unless the basic anomaly of the Scottish ratepayer as compared with the English is rectified once and for all. The Goschen formula has long outlived its usefulness. It has no basis in fact today and General Grant (Increase) Orders in relation to Scotland—even this Order—are still based on the Goshen formula.
My hon. Friend said that the figures of the increase were agreed in negotiation with local authority representatives. One should like to know, which local authority representatives? Who negotiated? This is a very important point. I must tell him that many local authorities in Scotland are not aware that their representatives discussed this point, nor that any agreement was reached on the amount of the increase—[Laughter.] The right hon. Member for Argyll, need not chortle about this. They were no more aware of such discussions when he held office. This is a basic weakness of the principle.
What is meant by negotiation? Some people are called in to the Scottish Office and told that this is the situation and these folk—who in a far-out kind of way represent Scottish local authorities, although no one is quite sure of their relationship with the local authorities—are finally worn down and accept the figures of the Department. I am not blaming my hon. Friend for this situation. It has been in operation for many years and has been brought to a very fine art. It would have been remarkable if he had been able to change it during the last year. This is what happens.
I do not think that the sums referred to represent the right increase required by Scottish local authorities. We have heard many complaints about the poor English ratepayers. The Scottish ratepayer is paying much more and receiving far less for his money. That is a statement of fact which I should be out of order in expanding, but it is a fact. The reason is not that Scottish house rents are so low or Scottish local authorities are inefficient or stupid—as was suggested in an article in a well-known journal recently—but that the basis of Government grants to Scottish local authorities is unfair.
This fact has never been faced squarely: Governments have run away from it. The Goschen formula of eleven-eightieths has been applied and the needs have never been considered. It is time that Governments saw that justice was done in this matter. The Goschen formula belongs to the last century: we need another kind of formula.
Scottish Ministers in the last Government did a poor job. They were never prepared to face up to Scotland's problem. They gave plenty of lip service to it, here and elsewhere, but they did a bad job in Scotland. I hope that my hon. Friend and his right hon. Friend will face up to the problems of Scottish local authorities Neither the new Rating Bill nor any other Rating Bill or Rating Relief Bill or any other alteration in local government finance will solve the problem of Scottish local authorities unless Government grants and Government assistance to local authorities are given on need and not on the Goschen formula——

Mr. Michael Noble: The hon. Member has been taking the opportunity to make rather sweeping and what I think he hopes are offensive remarks about my conduct as Secretary of State. If he is thinking solely in terms of the General Grant Order, I accept what he says, that I did nothing about it. But before he speaks about the Goschen formula, and about Scotland getting nothing more than that formula, perhaps he would consider what his right hon. Friend has done in the last year—very considerably less than we did in any of the last five years.

Mr. Robertson: I do not know whether or not the right hon. Gentleman is looking for my sympathy. He had a much longer run in office than my right hon. Friend has had. I tried to guide him in Committee about how he could rectify this, but he chose to ignore my advice. Scottish Ministers were very misleading and very rude at that time about grants to Scottish local authorities. I am now giving my hon. Friend the advantage of my advice in the matter, and I hope that he acts upon it more speedily and does not reject it, as did the right hon. Gentleman. When we discussed this subject on a previous occasion, the right hon. Gentleman was not even interested. Perhaps this is why my remarks about the right hon. Gentleman


—though I did not intend this—seemed to him to be offensive. I intended merely to chaff him a little, but not to be offensive.
He did nothing. Nothing which his Government did helped Scottish local authorities: he must face up to this fact. He should also face up to the fact that he did nothing about Scottish ratepayers paying far more than English ratepayers. The remedy was in his hands. All that was required was that he should stand up to his English counterpart. All that was required was a little courage.
I hope that my hon. Friend and the Secretary of State will have the courage to stand up to their English counterparts and demand that Scottish local authorities be treated on a par with those in England.

5.50 p.m.

Mr. David Steel: I am becoming a little tired of the argument so often used by the Government to the effect that they are unable to do certain things because the Tories did not do them during their 13 years in office. This is a weak argument because, after all, the Tories were put out of office by people who expected some changes to be made by the new Government and who were not expecting a natural continuation of what had gone before.

Dr. Dickson Mabon: Would the hon. Gentleman not agree that, although the Conservatives were swept from office, not all their Statutes were swept from the Statute Book? Is he not aware that we were obliged to follow those Statutes unless we altered them?

Mr. Steel: I accept that, but after all that we have heard from the Government we should be given some information about the great plans which are being hatched in the minds of hon. and right hon. Gentlemen opposite. Instead, we have merely been given a melancholy picture of how they must continue what was done before.
When considering increased rates expenditure in Scotland I must raise a matter which I have raised before and which I understand it is in order to discuss today. It is the question of the increases in transport charges which are being

borne by Scotland. If the Scottish Ministers had been doing their job effectively they would have made sure that when steps like this were taken—in this case the Government claim that the steps were necessary because of the economic situation—Scotland would not have had to bear the full brunt of the hardship. In other words, it should be possible to find methods to enable Scotland to have a different level of fuel tax or vehicle duty.

Mr. Noble: Would the hon. Gentleman remind the House that when I proposed an amendment to that effect the entire Front Bench opposite voted against it?

Mr. Steel: That was indeed reprehensible of them, although I believe that the Conservatives increased fuel charges twice during their period of office without presenting the sort of proposal the right hon. Gentleman put forward when he was out of office. The people of Scotland would have been more impressed had he moved that amendment when he was Secretary of State. We are now being asked to vote additional money to meet what I regard as an unfortunate rise in expenditure in Scotland some of which could have been avoided had the Scottish Ministers been doing their proper job of influencing their colleagues in the Government.
Much reference has been made to the Labour Party's election pledge that it would grant early relief to ratepayers. It was an important pledge, although I accept that in the modest proposal currently being put before the House an attempt is being made, at least in principle, to do this for one section of the ratepaying community. I am referring, of course, not simply to what the Labour Party stated prior to the election but later. In the spring of this year the Under-Secretary was going about the country saying that we could expect a rates increase of about 4 per cent. this year.

Dr. Dickson Mabon: Dr. Dickson Mabon indicated dissent.

Mr. Steel: That is so. Indeed, I was so surprised that I wrote to the Secretary of State to ask if that was a correct estimate. I was told that it was. In my part of the country the increase has not been of 4 per cent. but of between 11 per cent. and 12 per cent. Rate increases of this order fall particularly heavily on


the small burghs, which are finding it increasingly difficult to meet these increases. We are, therefore, entitled to ask what measures the Government are considering to alleviate the hardship, particularly for the small burghs.
Whatever the Government say about teachers' salaries in this connection, the whole question of this form of expenditure should not arise on the sort of matter we are debating today because teachers' salaries are now being determined and negotiated nationally. They no longer vary from one local authority to another and there is, therefore, no reason why this item should fall on the rating system. I would like to know whether the Government have considered this aspect as one means of switching expenditure from local authorities to the central Government, a proposal which would not involve any loss of power by the local authorities.
Some distinctions that exist between the procedure in England and Scotland puzzle me. For example, when looking around for other possible sources of revenue for Scottish local authorities, have the Government considered the anomalous position of what happens to dog licence revenue? I imagine that this is a tiny item compared——

Mr. Deputy Speaker: I do not think that that arises on this Order.

Mr. Steel: I thought that it might, Mr. Deputy Speaker, but I must accept your Ruling. I hope that the point has reached its target and that the Under-Secretary might Lind it possible to mention it when he replies.
I had hoped that the Government would indicate the possibility of more substantial proposals for alleviating the hardship on ratepayers in Scotland. The Minister of Housing and Local Government gave hon. Members to understand recently that he would welcome a complete change of the rating system, perhaps to some form of local income tax. That would indeed be a welcome change, and I hope that we will hear more about it. While such a change is a long-term prospect, I hope that the Government will, in the meantime, seriously consider methods of stopping this annual business of increased rates plus increased Votes of this sort.

5.57 p.m.

Mr. Mick Buchanan-Smith: It was interesting to watch the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel), with his usual Liberal dexterity, placing his feet carefully one in each camp. At one moment he was using his stick to castigate the present Government while at the next, when the right hon. Member for Argyle intervened, he was quick to turn the stick and try to use it against the Opposition. I must compliment him on the dexterity of his approach.
If he and his Party wish to be consistent in this matter he should not criticise the present Government when they are following Tory policies, for then they are carrying out the good policies of the former Tory Government. If the hon. Gentleman really believes what he says, why does he not give less support to the Government, certainly less than the Liberal Party has been giving to them recently?

Mr. John Robertson: Surely the hon. Gentleman would not criticise the Liberal Party for supporting both the Tories and the present Government. Is he not aware of the old saying of Jim Maxton, "If You cannot ride both horses at the one time, what are you doing in this place?"

Mr. Buchanan-Smith: The trouble with that is that one can fall off mid-stream and be crushed between the two.
It is entirely wrong to suggest that my hon. Friends and I criticise these increases. There is no question of our criticising them as such because my hon. Friends, as well as others outside the House, recognise the important work which local authorities do. We appreciate, therefore, that unless they have assistance from the central Government the burden on the individual and the rates would be tremendous indeed. We appreciate that these increases are necessary. What we are questioning is not so much the fact of the increases but the reasons why they have taken place, as my hon. Friend the Member for Moray and Nairn (Mr. G. Campbell) stated so strongly.
The hon. Member for Paisley (Mr. John Robertson) spoke of the rate burden which was placed on Scotland and said how inequitable it was compared with the burden placed within English local authorities. He skated over the question


of council rents, saying that this was not a matter of great importance. He also referred to an article in a certain journal. If I am thinking of the same article, I believe that the position was put very fairly and objectively, and the hon. Gentleman should have paid more attention to the point and not skated over it. There is no question at all that in relation to the level of rates, council-house rents are most important.
The hon. Gentleman must also recognise that my right hon. Friend the Member for Argyll (Mr. Noble) when Secretary of State for Scotland, and his predecessor, tried to redress the position——

Mr. John Robertson: The hon. Member should at least listen to what I said. I mentioned that the article said that the quality of councils in Scotland was remarkably poor, and I thought that was a very scurrilous attack on many excellent people in local government. He should get down to the effects of the burden of housing on Scottish rates.

Mr. Buchanan-Smith: I refer to an article on council-house rents, which showed clearly that if these rents were more realistic in some areas, the rate burden would be much more fairly spread.
I want now to compare the increases in the two periods in question. It is interesting to note the relative increases in the different items in 1965–66 and 1966–67. Whilst the increase in wages and salaries is expected to be of the order of £275,000 the relative figure for costs is estimated to fall by £60,000. How do the Government calculate that the relative increase in costs will be reduced in the second year as compared with the increase in the first year? The present record of the Government does not give us any confidence at all that this increase in costs will not he maintained over the second year.
Another item is interest on loans. In the two years in question, the relative increase in interest on loans is expected to fall by £110,000. Does that result from the Government envisaging that there will be an easier credit position in 1966–67? With the present economic position, and the present policy of the Government, I feel that there is very little prospect of that happening in the immediate offing

or even as far away as 1966–67. But perhaps this relative reduction in loan interest is expected to result from reduced capital expenditure, may be from the delays in school building which the Government have imposed. Perhaps we may be told more on that subject.
It is unfortunate that the item of heating and lighting is not differentiated in the omnibus category of costs for heating and lighting, vehicle duty, postal charges, etc. Prices in some of the nationalised fuel industries are being held at their present level as a result of Government intervention; but have the Government taken into account what will happen when the present restrictions on those industries are removed and when, as is inevitable, coal prices rise? Has that increase been taken into account in this Order? I am quite sure that once the restrictions are removed the dam will open, and costs will go up at a far higher rate proportionately than they have recently. The Under-Secretary may recognise that these costs are likely to increase, but perhaps he is being optimistic in thinking that other costs will decrease to compensate for that rise. If that is so, it is his duty to tell us what costs he hopes will fall, for fuel costs will certainly rise.
We on this side are trying to determine why these increases are taking place, and believe that the responsibility for them lies fairly and squarely on the shoulders of the Government. The National Insurance contributions, transport costs, interest rates, vehicle duty, postal charges are all items of cost which the local authorities have to bear, and over which they have very little control. They have risen in the past year as a direct result of Government action. I represent a constituency in one of the remoter areas of Scotland where transport costs are a big item of local government expenditure. In comparison with certain other areas of central Scotland, for instance, and the more populated areas in England, this item bears very heavily on such local governments.
If it is fair to say that costs in the public sector have risen as a result of Socialist Government action, it is quite right for us to reflect on the extra cost which business, industry, agriculture and individuals are having to bear in Scotland as a direct result of that action.


The Under-Secretary said that he would be seeking new legislation—and I took down his words—to escape "the shackles of the present plight". We have these shackles of the present plight because we have a Government which follow a policy which raises costs. The best way of escaping from the shackles is not to seek legislation, but for the Government to quit office.

6.06 p.m.

Dr. Dickson Mabon: I must congratulate hon. Members opposite on managing to hinge so many denunciations of the Government on such a slender Order as this, but we have had previous experience of this type of thing and I do not complain of it. It may be that I am rather wasted as a Joint Under-Secretary of State; perhaps in this context I should become Chancellor of the Exchequer or, indeed, my right hon. Friend the Chief Secretary, in trying to reply to points that are primarily a matter of concern to the Treasury.
I must tell the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) that I did not go round the country, as he said, saying that the rates would rise by only 4 per cent. For once in my life, I said—and I did so on the advice of the Scottish Office in reply to a Parliamentary Question in, I believe, February last—that as far as we were able to ascertain, there would, on the basis of the then trends, be a rise of 4 per cent., given that there was a change of 2 per cent. in the basis of valuation in Scotland. I said that the rise would be 6 per cent., but with a deduction of 2 per cent. because of the change in valuation. I did not take any great consolation in those figures, but they were the best available to the Department then.
When one is asked a hypothetical question, one can either seek honestly to answer it on the basis of trends or protest that the hypothesis is unsound and should not be commented on. I have the feeling, being now chased on the matter, that I should have taken the second course, but I think that the hon. Gentleman will see the point—

Mr. David Steel: With respect, I do, but I was putting to the hon. Gentleman, not his Parliamentary answer, but a speech made by him in Scotland. If he

wishes, I will send him a cutting from the newspaper.

Dr. Mabon: I shall be delighted to have it, but I have the feeling that the speech comes out of the Answer to the Question in February. I may be wrong there, but it was a hypothetical question which I genuinely answered at the time.
The figures are not 4 per cent. and 6 per cent., but 7 per cent. and 9 per cent., and I am willing to see those on the record. They compare rather favourably with that disastrous year, 1961, when the figure was 19 per cent. Had I known that hon. Members would be going over all the increase Orders we have had since 1959, I should have been delighted to supply the House with the appropriate figures—and they would be quite surprising—showing how these percentages have gone up.
I do not seek to justify the present position at all. No Minister has ever done this. No Minister has ever done this, either on the English Order this year or last year or on the Scottish Order this year or last year.
We do not like this system. There is an in-built escalator here which we are trying to remove. However, it is worthy of note that the only public declaration, so far as I can trace, of the party opposite in relation to transfer of expenditure is in relation to England. It was in the speech made by the hon. Lady the Member for Finchley (Mrs. Thatcher). She spoke on rating at the Conservative Party conference in October, 1965, referring to the transfer of £100 million from the ratepayers to the taxpayers in respect of certain limited items. That in Scottish terms means a transfer of £10 million. That is about the only indication we have had of the thinking of the party opposite.
It would be quite out of order for me to try to respond to all the no doubt pertinent questions which were asked about what form the Local Government. Bill will take. The Bill is mentioned in the Queen's Speech. I assure hon. Members that Ministers have been hard at work in constructing a Local Government Bill for both countries. No doubt this will take up the point made by my hon. Friend the Member for Paisley (Mr. John Robertson), because he will have to see both Bills together to be able to make his accounts and do his arithmetic. Perhaps he will


be able to return to his argument then about the Goschen formula and about the relativity of the Scottish ratepayers' burden to the English ratepayers' burden. At present about 60 per cent. of expenditure is covered for Scotland, while it is only 55 per cent., in the context of these increase Orders, which is covered for England.
The hon. Member for Dumfries (Mr. Monro) managed to ask me a number of questions. I am sorry that he complained about the way in which I had treated him in regard to the discretionary grants for sporting clubs. I have written to him twice on this. A Statute would have to be changed to bring about the end he desires. This obviously cannot be done in an increase Order. It would have to be done, if it were done at all, in a Bill.
I am surprised that the hon. Member keeps complaining to me that somehow I should be able to induce some mandatory behaviour on the part of certain local authorities, which would resent it very much, in relation to the point he is making. Within the context of the present discretionary matter, we are doing what we can. We have drawn this to the attention of sporting clubs and local authorities in the different areas. As for the hon. Gentleman's other questions about the percentage grant, I would prefer to await the publication of the Local Government Bill.
As for the hon. Gentleman's quotation from my right hon. Friend's speech—his very admirable speech; I have to say that—[Laughter.]—because it is true—about it being the last general grant Order, my right hon. Friend may well he right. In fact it will be the last General Grant Order, because this is the General Grant (Increase) Order and it is quite conceivable, as I said in my earlier remarks, that we may have an increase Orfder next year to take account of certain other matters which may arise between the years of the Order as it is increased affecting the year 1966–67 and the beginning of the new rating year 1967–68 which we hope, with Parliamentary co-operation, we can see being affected by the new Local Government Bill. We hope that Bill will come out some time in the Spring and may get on to the Statute Book by July. Therefore,

my right hon. Friend is correct in that matter.
My hon. Friend the Member for Renfrew, West (Mr. Buchan) asked me a number of questions about teachers. I dare not enter this very difficult arena at the moment. The Secretary of State's decision on wage negotiations is normally indicated by the publication of draft salary regulations. These are open to representation by interested bodies and persons for a period of 40 days. I have no doubt that the dialogue, if it could be called a dialogue—it would probably involve more than two sides to the argument—will then continue. That has been the past practice. Naturally my right hon. Friend wants to see the whole position in the light of the new situation which to some extent he has created by his well known regard for the teaching profession, of which he was himself a distinguished member.

Mr. Buchan: I thank my hon. Friend for his flattering remarks. It was in fact in relation to this morning's leak that I suggested that a new situation had arisen. I asked whether my hon. Friend could suggest anything.

Dr. Mabon: I really cannot, on the strength of this Order, without getting into trouble with the Chair, answer that point. I hope that my hon. Friend will accept the assurance I have given him about what has been past practice and how my right hon. Friend is very concerned about these developments and will naturally take action as early as he can.
My hon. Friend the Member for Paisley raised a very important question in regard to the local authority representatives. I vividly recall being catapulted into the meeting of local authorities in November of last year. I know that we are often chided by the former Under-Secretary of State for Scotland about this. I do not think that he ever went to such a meeting. Within one month of my taking office, I was obliged to attend such a meeting and to take with me virtually what were the previous Government's figures and justify them to the local authority associations. At that time the local authority associations did not know that my right hon. Friend the Secretary of State and my right hon. Friend the Minister of Housing and


Local Government hoped to be able to persuade the whole Government to agree to an additional sum of money to the General Grant Order of last year. At that time, representing my right hon. Friend, I could not reveal that such discussions were going on within the Government, because we had been elected for only a few weeks.
I would not agree with my hon. Friend that Ministers, not only in this Government but in previous Governments, are able to wear local authorities down. It is a very powerful meeting. Scottish local authority associations are as energetic and resolute—rightly so—in the pursuit of Scottish matters as are Scottish Members in the House. The Association of County Councils sends its representatives. There is the Association of Counties and Cities. There is the Convention of Royal Burghs.

Mr. John Robertson: Does not my hon. Friend agree that in the final analysis the choice before the local authorities is to take it or leave it?

Dr. Mahon: I would not quite say that. In fact, if the meeting between the local authority representatives and the Minister broke up in disagreement, the local authority representatives would know where to go, namely, to their Members of Parliament, who could make a great deal of trouble in the House. It is in the interests of Ministers to try to be reasonable and to come to an accommodation and an agreement with local authorities. To that extent, the local authorities know the strength of their own representation. I do not disdain these meetings. They are very much a part of our democratic scene. It is quite right that Ministers should be willing to go and meet the local authorities when they ask for meetings. On this Order there is a statutory obligation on the Minister to do so. The Scottish local authorities did not even ask for their right under Statute, because they were satisfied that the Gov-

ernment had done the best possible in this increase Order. There was no reason for them to come and meet Ministers.
There was an interjection in the speech of my hon. Friend the Member for Renfrew, West by the right hon. Member for Argyll (Mr. Noble)—I am sorry he has gone—in which the right hon. Gentleman complained bitterly that my right hon. Friend had done nothing—that was his word—to help local government in Scotland. This is an absolute caricature of the situation. As I said earlier, of the £20 million which was agreed in the main grant Order from which this Increase Order flows £1·2 million was Treasury money, in addition to the second year, which in fact covered a full local government expenditure of some £2 million. It was my right hon. Friend who had to find the money on behalf of the Government to provide the £1 million which was Scotland's share of the interim rating relief which we alluded to in the debate on the Rating Bill which we are at present considering. It was this Government that had to find that £1 million last year. It was this Government who introduced a White Paper dealing with raising housing subsidies and a Bill which will come shortly, virtually doubling the rate of subsidy for house building in Scotland. It is this Government who are introducing the Rating Bill. It is this Government who are preparing the new Local Government Bill, which we hope will satisfy hon. Members in all parts of the House that this Government are intent not only on ensuring that ratepayers get value for their money but also that the ratepayer is not unduly burdened.

Question put and agreed to.

Resolved,
That the General Grant (Increase) (Scotland) Order, 1965, dated 25th November, 1965, a copy of which was laid before this House on 1st December, be approved.

RHODESIA

6.20 p.m.

The Chief Secretary to the Treasury (Mr. John Diamond): I beg to move,
That the Reserve Bank of Rhodesia Order, 1965, dated 3rd December, 1965, made by Her Majesty in Council under the Southern Rhodesia Act, 1965, a copy of which was laid before this House on 3rd December, be approved.
I understand, Mr. Speaker, that it might be to the convenience of the House, if you thought fit, that this Order should be discussed together with the following Order:
That the Southern Rhodesia (Bank Assets) Order, 1965, dated 3rd December, 1965, made by Her Majesty in Council under the Southern Rhodesia Act, 1965, a copy of which was laid before this House on 6th December, be approved.

Mr. Speaker: If the House has no objection, so be it.

Mr. Diamond: As the Prime Minister explained to the House as recently as last Friday,
… we seek no conclusion in Rhodesia except an honourable return to constitutional rule. On this we must insist."—[OFFICIAL REPORT, 10th December, 1965; Vol. 722. c. 771.]
The economic and financial measures which we have taken are designed to this end, and among the most important of these is the present Order which secures control of Rhodesia's Central Bank. Perhaps it would be convenient to the House if I were to describe, first, the background to this Order, then the steps taken under it and finally their effect. Then I would propose to deal with the second Order which you, Mr. Speaker, have been good enough to say might be discussed at the same time.
The operations of the Reserve Bank of Rhodesia fall broadly into two classes—those relating to its internal affairs, such as the issue of Bank notes in Rhodesia, and those relating to external affairs. As to the former, the chief cashier and other officers of the Bank, whose tenure of office has not been affected by the Government's action, will continue to conduct the day-to-day internal affairs of the Bank from Salisbury.
By "external affairs" is meant in effect control over the assets of the Bank held outside Rhodesia, whether in the

United Kingdom or elsewhere. It is clearly our responsibility to ensure, as far as we are able to do so, that these assets are safeguarded in the interests of the people of Rhodesia and to prevent their being used for the purposes of the illegal régime. This is a state of affairs which must depend on having at the head of the Bank a Board consisting of men of complete integrity, of great knowledge in the field of banking, and above all of complete loyalty to our constitutional processes.
The Government have been able to achieve this dual purpose as a result of the Order which we are discussing. The previous Board has been suspended and a new Board appointed consisting of six men of the necessary qualities and distinctions. The Chairman is Sir Sydney Caine, the Director of the London School of Economics and for many years a senior official in the Colonial Office and the Treasury. Three of the directors, Lord Harcourt, Lord Poole and Mr. Warburg, are bankers of great experience. Many of us will remember Lord Poole as a Member of this House before he undertook high office in the Conservative Party. The remaining members are Sir Norman Kipping, former Director General of the Federation of British Industries, and Sir Gordon Munro, who has served both as Chairman of the Southern Rhodesia Currency Board and as High Commissioner for Southern Rhodesia in London. We are indeed fortunate that such a distinguished body of men was prepared to take on this arduous task in the national interest and we are deeply grateful to them.
The Board is already hard at work and has sufficiently established its authority. No central bank has refused recognition. Certain countries have recognised it either publicly or tacitly. In other cases the need to consult legal opinion has led to the funds of the Rhodesian Reserve Bank in those countries being frozen in the meantime, which is an equally satisfactory way of denying the use of these funds to the illegal régime.
As was to be expected, the effectiveness of this action was mirrored in a violent response by Mr. Smith. But from what I have said it will be clear how totally unfounded are the references to "confiscation". The assets of the Rhodesia Bank have not been transferred to the


United Kingdom Government. They can still be used on the instructions of the new Board for making such payments as are permitted under our exchange control arrangements. What they cannot be used for is bolstering up the illegal régime, for this Order serves the dual purpose of safeguarding the people of Rhodesia and hastening the return to constitutional government in the most effective way.
Moreover, to make sure that the Board is seen to be fully supported by the Government and at the same time to enable us to develop our policy in the most effective way, by obtaining, for example, any necessary information as to the location of any reserve assets abroad, the Order provides for the Secretary of State to give directions as to the conduct by the Board of the business of the Bank.
The Southern Rhodesia (Bank Assets) Order, to which the first Order is closely related, is the second Order before the House. Information about the amount of bank assets is of obvious relevance to the formulation of our policy of securing the return to constitutional government. This Order enables the Treasury to obtain that information.
The exchange control measures introduced on 11th November brought all Rhodesian accounts under Treasury control. This meant that the Treasury was able to obtain information about transfers into and out of those accounts. This Order enables the Treasury to obtain information about the net balances held by banks in the United Kingdom on behalf of Rhodesian banks. That information is not obtainable under exchange control powers, or under any other powers normally available.
In normal times information about the balances of customers, whether at the Bank of England or at other British banks, is completely confidential and not available to the Treasury. In the very special circumstances which now prevail in relation to Rhodesia, the Government find it necessary to have this information. In order to get it, we approach our task in a proper, open and legal way by making use of the special powers available under the Southern Rhodesia Act, and we bring the Order before the House for approval as required under that Act.
The Order will also protect the legal position in relation to their customers of banks which are required under the Order to supply information to the Treasury. One account in which we are interested is that of the Reserve Bank of Rhodesia held at the Bank of England. But the Order covers also assets held not only at the Bank of England hut with other banks in the United Kingdom. For example, it would apply to assets which a commercial bank in the United Kingdom might be holding on behalf of the Reserve Bank of Rhodesia. Furthermore, the Order applies not only to the assets of the Reserve Bank of Rhodesia but also to the assets of any Rhodesian office of any bank. This information, too, may be relevant to the formulation of our policy.
I must emphasise that the Order applies only to bank assets. It does not enable the Treasury to obtain information about the accounts of Rhodesian residents other than banks, for example, private individuals in Southern Rhodesia. The Treasury will use the powers conferred by this Order with proper circumspection. Any information which the Treasury may obtain under the powers conferred by the Order will be treated as strictly secret.
I am very conscious that I have not attempted to deal with the detailed provisions of the various sections or to explain the legal niceties. I do not imagine that this is what the House wishes to know. Rather, I believe it my duty to make clear, as I have attempted to do, that these Orders are an important element in the Government's policy of securing both the real interests of the Rhodesian people and the earliest possible return to constitutional government. Nor is there any inconsistency between these two objectives. In my view we cannot secure the first without the second, and I ask for the full support of the British House of Commons in achieving both.

6.30 p.m.

Mr. William Clark: In all parts of the House we regretted Mr. Smith's U.D.I. on 11th November, and today we are discussing an Order dated 3rd December. My first question is: why was there a delay of 22 days? This delay meant that there was tacit agreement that the Rhodesian


Government, if I may so call it, in Salisbury were able to carry on their banking business. The British Government had warning of what has been going on since the U.D.I. In the Financial Times of 18th November there was a closely reasoned article which told us that the Reserve Bank of Rhodesia was buying all the gold it could. This was in the sort of twilight period.
Following that, on 23rd November, the British Government allowed the Rhodesian Government to use their balances in London in order to settle part of their external debt. In fact, during the twilight period of 22 days, the British Government allowed Rhodesia to operate its banking system as though nothing had happened.
These are relevant points when we are considering this Order. If it is right to introduce the Order now, it was far more right to introduce it 22, days ago. Why the delay? On 10th December, the New Statesmen, which does not usually support this side of the House, had an article saying:
There are formidable consequences. If the controls had been imposed on the day of U.D.I. they might have toppled Smith immediately. Now he has had time to build banking contacts elsewhere, and perhaps transfer some funds out of London; some inter-company transfers may also have been made,
and then it adds a comment about what may happen "if he survives". This delay of 22 days must be explained away, and I hope that whoever is to reply for the Government will address himself to my question.
The Government's action now is extra proof to the electors that the present Socialist Government are governing only from day to day, never looking to the future to see what the effect of their policy would be.
I come now to two minor points on the Reserve Bank of Rhodesia Order, S.I.No.2049. Paragraph 2 suspends the Salisbury board. But what about the Reserve Bank of Rhodesia Act, 1964, under which the directors were appointed for five years and the chairman for seven? They have been suspended, but are salaries still being paid? Is there any question of compensation for loss of office? These are minor points, but

the right hon. Gentleman did not deal with any of them.
We now have the new board appointed, and, presumably, this board will be able to take over whatever reserves there are in this country. For the record, perhaps I may give the figures which I have been able to obtain of Southern Rhodesia's reserves. In London, approximately £9 million; in South Africa and Switzerland approximately £9½ million. I say that because in the Financial Times of 8th December there was an article saying that the Rhodesian Government, or the Smith Government, to put it in that way, had instructed their overseas journalists to pay their bills in either Swiss francs or South African rands. I wonder what the present position is as regards the £9½ million. Who can say? The right hon. Gentleman may have the break-up. Perhaps £6 million is in South Africa and £3½ million is in Switzerland. We know from the latest figures that there was £3½ million worth of gold actually in Rhodesia itself. It will be found that these figures add up to the £22 million reserves.
The position must have changed because Mr. Smith said recently that there was only £12 million overseas, not £18½ million as shown in the last official figures. Possibly there is £10 million in Rhodesia? Who knows?
I appreciate that the second Order deals only with United Kingdom banks, and the new London board is trying to find out where these accounts are either in Switzerland or elsewhere. But money is held abroad by many people and not necessarily in the name of the parcular Government. It can be in a numbered account or in a personal account. Therefore, it is possible that Mr. Smith's allegation that he has only £12 million abroad may be right.
Is the Order merely a device to take over the overseas reserves of the Bank of Rhodesia? I remind the Chief Secretary that Her Majesty's Government have not got powers of expropriation. Is the Order another external sanction against Rhodesia? The Chief Secretary said that the cashier of the Bank and others in Rhodesia would carry on their currency function. Is there any intention to interfere with that at all? Just taking the assets which are immediately available in this country is not enough.
The most important and the most explosive paragraph of the Reserve Bank Order is paragraph 3(e). What will be the position of the British taxpayer under it? The new board of directors has been set up under the Order, and paragraph 3(e) plainly removes the usual duty of a director to hold his powers in trust for the benefit of the company. I am delighted to see the two Law Officers present. Perhaps they will address their minds to this question. May not this provision of the Order have the effect of making the London board the agent of the Secretary of State and, therefore, attract to the Government liability for acts of that board? How will this affect the British taxpayer?
The Government say that the Smith régime is illegal. What about interest on the external debt of the Bank of Rhodesia? This arises under paragraph 3(e). The prospectus of one of the stocks issued, the 4½ per cent. 1987–92, says that
the revenues of the Colony of Southern Rhodesia alone are liable in respect of the stock
and it goes on to say that the Consolidated Fund in this country shall not be affected at all. But, as I understand it, the United Kingdom Government are now the Government of Rhodesia. If this Government are the effective Government of Southern Rhodesia, then, according to that prospectus, they are the Government of Rhodesia responsible for the interest.
The total public internal debt of Southern Rhodesia is £113 million. Rhodesian Government stock is £67 million. The World Bank liability, which, incidentally, the United Kingdom Government have guaranteed, is about £25 million. There is then about £16 million advanced through C.D. and W. and by the British Government. This is a total of £221 million and the debt repayment is about £8 million per year.
I would like now to come to the so-called "twilight period" between U.D.I. and the date of the order.

Mr. Paget: The hon. Gentleman has given us the figure of the debt repayment. Has he also got the interest figure?

Mr. Clark: The figure is £3¼ million.
During the twilight period between 11th November and 3rd December, the Smith régime, on 21st November, paid the

interest on the 6 per cent. 1976–79 stock on Rhodesia. This was before the takeover of the Bank by the British Government. What happened to the interest on the 4 per cent. 1972–74 stock which was due on 6th December? The Bank of England refused to pay this although I understand that all the warrants had been made out. I quote what the City Editor of The Times had to say. I think that he put his finger on the point. He said:
It is, however, an unhappy precedent (as are so many others) as it looks like being the first time ever that there has, been a default on any British or Commonwealth stock.
This is the first default in our history on any Commonwealth stock. The payment that should have been made on 6th December totalled about £90,000 gross, before the deduction of Income Tax. It is interesting to see who owns the stock. There are about 1,500 shareholders comprising charities, investment trusts, trade unions and insurance companies, which invest on behalf of the small investor. They are not large capitalists. In addition to them, there are the small investors who also hold this stock as individuals. The City Editor of the Sunday Express said on 5th December that many of them held under £100 of stock.
I know the interest of the Chief Secretary of the Treasury in small savings and it is an interesting situation that, with the encouragement offered by successive Governments of both parties to savings and, indeed, to investment in the Commonwealth, here for the first time ever there has been a default on a Commonwealth stock. Some people who invested in this stock may be suffering hardship because they cannot get their interest.
We warmly welcome the Government's somersault on pensions, but it is no use saying that, in this case, no money has come from Salisbury because if Her Majesty's Government are right in saying that a Salisbury Government do not exist, they could not in any case take money from Salisbury because its acceptance would constitute at least de facto recognition that there is a Government there, even though we say that they are illegal.
It is no good saying that the Rhodesian directors have not sent any money, for Her Majesty's Government have suspended them and presumably they are no longer active. The London Board has about £9 million at its disposal. There


is no payment of interest on these stocks. At the moment they are considered to be trustee security stocks. What is the position now when they do not bear any interest, the interest payment having gone by default? Are they still trustee security stocks? Does it mean that a person holding these stocks under a trust—depending on the constitution of the trust—must sell the stocks because they are no longer trustee security stocks? If that happens there will be a flood of these stocks on the market and the price will be depressed even more. Indeed, the stocks have been depressed so much that one of them now yields £11 12s. 6d. per cent. What will happen if these trustee stocks have lost their trustee status? It is an important point.
What are the implications for us as sterling bankers? Unless the debts are serviced, the Government will have proved that we have used our external banking position in order to prosecute a private quarrel. Will that be good for us as sterling bankers? We are in an extremely precarious position unless the Secretary of State instructs the Bank to pay the interest. Failure to pay could have far-reaching effects on our position as sterling bankers. It could be detrimental to our economy.
This is an extremely unhappy situation, but it is even more so for the United Kingdom banks in Rhodesia. The right hon. Gentleman said nothing about Barclays D.C.O. and the Standard Bank. They are entitled to some guidance from the Government. What is the position if London banks in Rhodesia obey the London directive and disobey the Salisbury directive? What recompense will they get from home? Do the Government intend to compensate?
All that the second Order refers to is assets. But what about the contingent liabilities? It is quite possible to have £10,000 in the bank but a contingent liability of £8,000 or so, with the result that one's net worth is £2,000. Why is there, in the second Order, only a reference to assets? We should know something about the liabilities, contingent or otherwise.
The right hon. Gentleman said that any information given under the second Order would be confidential. We are delighted to hear it. But I cannot think why some

such note could not have been put in the Order. It seemed on reading the Order that the information would not be secret.
The Government have had this problem before them for many months and my greatest criticism is that these measures were not thought out from the start. Why do the Government always give the impression of governing from day to day? We have seen this so often. The Government lurch from crisis to crisis. It is not good for any Government to govern from day to day. They should look to the future.
It would be out of order for me to deal with other sanctions that have been imposed—our insurance business is being badly damaged, for example. But we must have answers to the questions I have posed. The whole position depends on what instructions are given by Her Majesty's Government to the London Board. Because of Britain's unique and important position as world bankers, we must be sure that the Government, even at this late stage, realise the issues involved. I am not sure that they do. Have they really thought this out to finality? I am not sure that they have done so and consequently I am not sure that they will not give instructions to the Bank which will in no way jeopardise either our domestic economy or our international economy.

6.50 p.m.

Mr. R. T. Paget: This seems to be a case which illustrates the impotence of our position in this quarrel in which we have landed ourselves. When the hon. Member for Nottingham, South (Mr. William Clark) asks why we had not planned this in advance, the answer is simply that it was not part of our intention in advance. This was not one of the things which we intended to do. It has been something which we have been kicked into doing in order to give an impression of activity, of doing a lot, in face of pressure from the African nations. I hope that we do not have to submit any more to that pressure. I understand, according to their resolution, that the African nations are to withdraw recognition of us on Wednesday. I hope that we shall accept that as having played themselves out of this game. One cannot bluff, have one's position called, and then resume.
Let us examine for a moment what this action, set up and thought of as the only thing we could find to do, does to us and what it does to the de facto régime in Salisbury. Recognising that this is the best thing which we could find to do, it illustrates just how weak our position is. What does it do? First, we gravely injure our banking position as a reserve banker. That does not worry me very much. I would very much like to see us ceasing to be a reserve banker, and I have always held that view, but if we are to be a reserve banker, we must play that game by its rules and we cannot use our reserve banking position in order to play our politics.
If on Day I we had said, "We are now the Government of Rhodesia and the Reserve Bank is our bank and the liabilities of Rhodesia are our liabilities", that would have been a perfectly tenable position in our rôle as the reserve banker. What is not tenable within thatrôle is to allow the de facto régime to proceed within our banking system for 21 days to operate that bank as its bank, the bank of an illegal but none the less operating and de facto régime—for surely there are many régimes which after revolutions and the like are de facto for a period. If, after recognising and allowing operations of a de facto régime, we are suddenly and for political purposes to withdraw its banking facilities and to make a switch, we undermine the system of confidence necessary for an international banker. The business just cannot be run that way. Thus, the first thing we do, in terms of our credit and the management of our business, is to do ourselves a serious injury, and we do that whatever we do about the liabilities of Rhodesia.
The next consideration is our position with regard to the liabilities of Rhodesia. Do we assume them, or do we not? From the point of view of the de facto régime in Salisbury, that matters little because, whatever else we have done, we have effectively released that régime from its liabilities. When we seize Mr. Smith's reserves and his bank, nobody blames him for not paying debts which we say are not his debts because he is not Rhodesia. On that view, he is released from those debts.
It may be that my right hon. Friend the Chief Secretary and I are somehow at cross purposes, but I cannot see how the

repayment of debts and interest on an indebtedness of well over £220 million can possibly be only £11 million a year. The figure which I have been given is £26 million a year, which is the liability from which by this manoeuvre Mr. Smith is released. Perhaps I can be given some figure.
In passing may I say that that is probably about double the injury expected to be done to him by the tobacco embargo. In other words, over the year for which the tobacco embargo operates, we shall release him from payments about double the tobacco receipts of which we shall deprive him. Assuming that we get that part of the reserves which are held abroad as well as those held in this country—and about £12 million to £14 million is the probable figure—for a catch of f12 million to £14 million Mr. Smith will get a return of £26 million a year, which is just about the most remarkable paying investment which any government has ever been offered. This illustrates how difficult our position is.
The best we can do, the "hot shot" sanctions which are to bring Mr. Smith down, turn out to be an injury to our credit and sterling position, because if we are to support sterling and Commonwealth loans at all, we have to pay these costs of——

Mr. William Shepherd: I am very anxious not to misunderstand the hon. and learned Member. Would he be good enough to tell me how sterling prestige, both in terms of currency value and banking, has suffered since this announcement was made? I should like to get clear what he has in mind.

Mr. Paget: I thought that that was what I had dealt with earlier in my speech. If the hon. Member did not follow it, perhaps some of his colleagues will be explaining it to him again during the debate. I was saying that using one's position as a central banker for political purposes after having recognised a banking position——

Mr. Shepherd: Can I press the hon. and learned Gentleman? Has this been reflected in the level of sterling or the level of foreign funds deposited in London? Will he answer the question?

Mr. Paget: I am not saying that that immediate effect has happened. This is a long-term effect which is remembered when there is trouble somewhere else. The hon. Member will hear from people in the banking world who know more about this than I do, and he will certainly learn in the process the kind of injury which this sort of manoeuvre causes to confidence within that business. There is no run on sterling at the moment or anything like that.
The other point is that if we do not support the Rhodesian loans, after claiming to be Rhodesia, and deprive the de facto Government of the means of paying, then certainly sterling colonial stocks will cease to be trustee stocks and will cease to hold their value. I am simply assuming that this is the position which we have to take over, and that we have to pay this liability. For the purpose of putting a short-term squeeze on Rhodesia it is costing us, in terms of our banking position, something immeasurable, and in terms of sterling stock something measurable, as I understand it, at about £26 million a year. This is the best we can do, and it seems to illustrate just how weak is our position in this silly quarrel into which we have got ourselves. I shudder a bit at the thought of what the next stage will be. During the next week I should have thought that nothing in the world was more important than that our representatives should be in a position to say "I must refer back to my Government"——

Mr. Speaker: Order. The hon. and learned Gentleman, with difficulty, has kept in order. He is now in order but he must not tempt himself out of order.

Mr. Paget: I will not go further than that. Within the next few days I am keeping my fingers crossed as to what further steps we may be involved in——

Mr. Speaker: Order. The hon. and learned Gentleman must concern himself with the subject with which we are involved in this Order.

Mr. Paget: I see how injurious and costly this is to us and what a small injury it has been to Rhodesia. I must not go further on that.

7.4 p.m.

Mr. Jeremy Thorpe: The hon. and learned Gentleman will not

be surprised if I do not find myself in agreement with most of his conclusions. I do find myself in agreement with most of the remarks of the hon. Gentleman the Member for Nottingham, South (Mr. Willian Clark), although I must say that I was surprised to find the Opposition Front Bench complaining that the sanctions had not been sufficiently swift. No doubt the next stage will be for them to say that they are not sufficiently stringent, and then we shall really be in "Alice in the Looking Glass". I agree with him when he suggested that the Government could have introduced these measures long before they did. The Government's slogan could well be, in regard to Rhodesia, and particularly with regard to these Orders, "For every crisis an immediate compromise providing it maintains national unity," which interpreted means not losing the Labour Party any votes in the country.
I am pleased to see that the hon. Gentleman is taking what I must call the "Chippenham line", bearing in mind the criticisms made by my right hon. Friend the Member for Orkney and Shetland (Mr. Grimond) over the weekend, of the Government's handling of this crisis. I want first of all to ask the Government what powers are these directors to be given? Both the Orders in Council refer to the power to request information, the power to suspend the existing Board, the power of appointing a new Board and the functioning of it, but there is no reference to the actual powers which may be exercised by these directors. I speak subject to correction on this. I assume that in so far as they now constitute the legal Reserve Bank of Rhodesia they may be deemed to exercise all those powers granted by the Southern Rhodesia legislature in the Reserve Bank of Rhodesia Act, 1964, passed by the Southern Rhodesia Legislature.
I am not certain how many hon. Members have seen this, particularly because I understand that I have the only copy at the moment available from the Library. There are very extensive powers given to that Bank, and I think that it would be helpful if the Government can tell us which of those powers they think they are going to exercise.
But may I ask first of all whether we can have a little more information about the extent of the disclosures which have


already been made? The Financial Secretary said that so far no country and the banks of no country had refused to disclose information and refused to recognise that the Reserve Bank was now vested in the board which the Government have set up. But he said that there were those who were reserving their position pending the taking of legal advice. Could we know what success the Government have so far had in obtaining disclosures as to the whereabouts of assets with particular reference to the banks of Switzerland, South Africa and Portugal?
I entirely agree with the hon. and learned Gentleman, that if we are going to take over the assets of a country then we must obviously shoulder the liabilities as well. The last people who should be made to suffer for the illegal declaration of independence should be small investors in this country, or any other country. We would like to know a little more about the extent to which the liabilities will be shouldered.
I now turn to one or two of the powers granted to the original bank under the 1964 Act. Under Section 11 of the Reserve Bank of Rhodesia Act, the only people who have the right
to make or cause to be made and to issue bank notes in Southern Rhodesia
is the Reserve Bank itself. I take it that this Bank, now constituted in London could, technically speaking, make a new issue. It could call in all existing currency in Rhodesia or it could, to use the words of the Act, "demonetise" it. It has, therefore, very great powers. It could render illegal, at any rate as far as foreign exchange is concerned, or not recognise, all existing currency in Southern Rhodesia. If I am right that is a power which could now be exercised by the new Board.
Under Section 18 of the Act the Governor of Rhodesia, who I take in law to be either the Governor or alternatively the Secretary of State exercising that power as a result of the 1965 Act which we have passed, shall determine the value, under subsection (1)
… of the unit of currency which is legal tender id Southern Rhodesia in relation to both gold and sterling or to other gold or sterling.

Sir Kenneth Pickthorn: Either.

Mr. Thorpe: "Or to either gold or sterling". I am grateful to the right hon. Gentleman the Member for Carlton, whose correction I am sure the House will regard as valuable assistance, and I am in his debt.
Subsection (3) of Clause 18 provides that:
The Bank may determine the rates at which persons who are lawfully entitled to deal in foreign exchange may buy and sell sterling and other currencies.
Does not it come to this, that this Bank may fix the price at which the existing Rhodesian currency may be exchanged in the foreign market? It is, therefore, possible for this Bank effectively to devalue the currency of Rhodesia if it thought fit. Is it not also correct that, shortly after U.D.I., the value of the Rhodesian £ sunk to about 5s. compared with the £ sterling and that it was only after the Bank of England, for some strange reason, said that it would support the Rhodesian £ that the Rhodesian £ crept back to 20s. and reached parity with the sterling of this country? Therefore, is it not right to say that this Bank will have the power, not only to render all currency in Rhodesia illegal if it thought fit and to issue fresh currency, but also to devalue it in foreign markets?
I do not make complaint of that, but I should like to know whether it is right that this is a power which exists and whether the Government have any intention of operating it. I should have thought that if we wanted sharp, effective and bloodless sanctions there were very few things which could be done which could have brought about the desired objective with greater speed.
I would, therefore, particularly press two points: first, to what extent will the new Board of the Bank accept liabilities; and, secondly, with what powers is it to be clothed, and which of those powers is it likely to use?

7.12 p.m.

Sir Knox Cunningham: There are two points to which I should like the Chief Secretary to reply. One deals with the Southern Rhodesia (Bank Assets) Order, 1965, which provides in the first paragraph:
Any bank shall give to the Treasury such information as the Treasury may require concerning the assets held on or after 11th November 1965 at any United Kingdom office


of that bank on behalf of any Southern Rhodesian office of any bank.
This is confined to the United Kingdom offices of these banks. Do I take it that these include foreign banks and that any bank with a United Kingdom office will be compelled to give this information? This is an important point, and I should like it clarified.
Am I to take it that the Reserve Bank of Rhodesia Order, 1965, which the Chief Secretary explained, creates a new board of directors and suspends the old but, in the words of the Chief Secretary, that the issue of notes and the day-to-day affairs will go on in Salisbury as before? From whom do the officers of the bank in Salisbury take their orders—from the board of directors in London, or from the de facto people in Salisbury? This is important, because here one is splitting up this bank. If this unhappy situation goes on for a year or more, what happens? This Order breaks down the financial structure. What happens in the end? What do we do, and where are we going with this form of sanctions?
Lastly, would the Chief Secretary say whether this is recognised internationally? Certain revenue matters are recognised only in the domestic courts of the country which passes the law. I agree that this is not quite on all fours with that position. But will this change in law be recognised by foreign countries, and how will the Orders which we are passing tonight be recognised in international law?

7.15 p.m.

Mr. Julian Amery: Like my hon. Friend, I feel that we are embarking on a very dubious proceeding. I am rather reinforced in that view by the opening remarks of the Chief Secretary. He said that a number of countries were examining the legal implications of the Government's decision and whether in international law they should recognise our action. He went on to say that, meanwhile, the Rhodesian assets overseas were frozen and that from his point of view this was just as good as if our action had been accepted as correct in international law. That was the implication of what he said.
I do not think that it is a very happy position for the British Government, for the central banker of the sterling area, to

be quite happy if the validity of what we are doing is in doubt under international law and if we succeed in freezing Rhodesian assets abroad only because there is some uncertainty about whether the course which we have embarked on is valid in international law. I do not think that this is a very sound position for this country to get into.
This is not politically a very wise position for us either. What we are doing is not confiscating, I agree, but taking hold of money earned by the people of Rhodesia, European and African, and freezing it so as to inflict hardship upon them. The Chief Secretary will remember that the row with the American Colonies in the 18th century was all about money in the first instance. I can think of no way of making the British connection seem more odious to the people in Rhodesia than to impound their hard-won earnings for the purpose of inflicting hardship upon them.
I wonder, too, like the hon. and learned Member for Northampton (Mr. Paget), whether this course is really very healthy for the central banker of the sterling area. No doubt the Government have the right in domestic law to act as they have acted. I cannot judge the international law position; I do not know enough about it, although I understand that there are serious doubts on this in many quarters. But were the Government wise to act as they have acted? The essence of the sterling area is trust—trust that Britain will not take advantage of the small print or of legal niceties.
I am rather jealous, and I hope that the whole House is, of our good name. I remember very well when Colonel Nasser seized the Suez Canal Company's assets in 1956. I went with some of my hon. Friends to talk to the Chancellor of the Exchequer and to urge him to freeze the Egyptian balances—which were substantial—in London at the time. I came away from that talk convinced that the reputation of sterling required that even in a situation in which we were very near to war, and in which we were presently involved in military operations, it would have been wrong to have taken advantage of our position and acted against the Egyptian balances.
This case is not on all fours with the Egyptian case. In some ways, the Government have greater authority in


this matter, but in other ways they must recognise that the moral provocation is, in many ways at least, considerably less. I am not sure that we have acted very wisely.
Then there is the question which the hon. and learned Member for Northampton raised: will this be effective? Will the Government secure the assets? As my hon. Friend the Member for Nottingham, South (Mr. William Clark) said, this seems doubtful, particularly after the dilatory way in which the Government have acted. I make no complaint of the dilatoriness, but it makes their action considerably less effective.
Turning to the question of the liabilities, I do not think that it is possible—this seems to be the view shared on both sides of the House—to take over assets without taking over liabilities. But if we take over liabilities, are we really imposing a sanction? I shall be delighted if I thought that when we came back to power, somebody would take over this country's liabilities. It would be quite a nice start for a new Government.
I am beginning to think that whatever view we may hold of the Government's policy towards Rhodesia, the Prime Minister's adventure looks like being rather costly. If we are to have to pay either £11 million or £26 million a year to meet the Rhodesian liabilities, and if we are to have to pay what looks like being between £20 million and £35 million a year on dollars for American tobacco, the bill will be quite a big one. I hope that in the reply to this debate we can be told the precise estimate of the liabilities.

Mr. Michael Foot: Why does the right hon. Gentleman call it the Prime Minister's "adventure" when he himself has agreed to all the measures that the Government have proposed?

Mr. Amery: It is very nice to have the hon. Member defending his Prime Minister for a change.

Mr. J. J. Mendelson: Answer the question.

Mr. Amery: These Orders are the centrepiece of the second list of sanctions which the Prime Minister brought to the House last week and which together, including these two Orders, cover some-

thing like 95 per cent. of the economic relations between this country and Rhodesia. The Prime Minister put particular weight on the financial measures, of which these Orders are the key.
What is the purpose of these Orders? What is the political end which the Prime Minister seeks to achieve and for which these Orders are brought before the House tonight? The right hon. Gentleman made it clear in his statement to the House last Friday that what he is calling for is the unconditional surrender of the Rhodesia Front Government and Parliament.
Will these Orders and the supporting measures which go with them achieve that result? Not only have I the gravest doubts, but authorities like Sir Roy Welensky and Sir Edgar Whitehead, in articles which appeared in the British Press during the weekend, came out clearly with the view that there would be no "short, sharp result" either from these Orders or from the supporting measures which go with them.
I believe that these Orders are part of a policy which will prove ineffective. They will take months before they begin to bite at all, and I judge that they will never bite hard enough to achieve the unconditional surrender which the Prime Minister seeks.

Mr. Speaker: Order. The right hon. Gentleman is broadening the debate a little more than he should. We are discussing this particular sanction, not the others.

Mr. Amery: I accept your Ruling, of course, Mr. Speaker, and I shall try to keep my remaining few remarks as narrow as I can.
We have to look a little bit at the purpose of these two Orders. They are two of many, but their purpose as I see it is to fulfil the terms for a settlement of the Rhodesian problem which the Prime Minister put to the House last Friday. I recognise that the Government are in great difficulty and, therefore, this is not, perhaps, the moment to oppose these Orders tonight. I recognise that the Government are in great difficulties with the African States with whom they have to negotiate, both here in London and, it may be, at the Security Council. Perhaps this is not an issue on which to divide.


But the fact that we let the Orders go through—certainly as far as I am concerned—must not be taken to mean that we in any way support what might be called the war aims which the Prime Minister laid down in his statement on Friday.
I see no objection to the Government arming themselves with powers and putting themselves in a strong bargaining position, although I question whether these Orders are really helpful for that purpose.
But the time has come when the Government should follow the policy advocated by my right hon. Friend the Member for Kinross and West Perthshire (Sir Alec Douglas-Home) and seek to negotiate now with Salisbury. [An HON. MEMBER: "With whom?"] Sir Roy Welensky's answer is that there is no alternative to Mr. Smith. And I can think of no more suitable basis on which to negotiate than the terms put forward by my right hon. Friend in his speech at Glasgow yesterday.

7.15 p.m.

Mr. Colin Jackson: I had not intended to intervene but, having listened to the right hon. Member for Preston, North (Mr. J. Amery), I could not help feeling that the whole purpose of this discussion was being missed. Surely we are debating whether these financial measures should be given to Her Majesty's Government with a view to restricting the financial power of the Smith régime. I had assumed that we had already decided that the Smith régime was illegal and one with which we would in no circumstances discuss or negotiate. The question is whether these measures are likely to be effective. It is a question not of legal niceties but of basic principles.
I agree with the hon. Member for Devon, North (Mr. Thorpe) that if we are to have sanctions, those dealt with in the Orders seem to be most likely to be speedily effective in dealing with the Salisbury régime.
I should like to know whether, in relation to the financial measures, we have had co-operation from the banks in Switzerland, because a considerable amount of the funds of the illegal régime must be residing there. I should also

like an indication of what, after discussion of the legal niceties, is likely to be the attitude of Governments generally throughout the world to the power of our Government to take over the Reserve Bank.
I hope that all our discussions of this matter will be related to the general welfare of Britain and I should like to mention the remarks of the noble Lord, Lord Fisher of Lambeth, concerning certain of the comments of the Opposition, in which, in a letter to The Times yesterday, he said:
Knowing well, as I do, the extreme spiritual dangers of judging others, I have to ask whether Her Majesty's Opposition in Parliament recognise the harm they do, or may do, to the authority of Her Majesty's Government in Parliament.

Mr. Speaker: Order. We are not discussing Her Majesty's Opposition. We are discussing two specific Orders. The hon. Member must relate his remarks to the Orders.

Mr. Jackson: I was merely commenting, Mr. Speaker, on the remarks of the right hon. Member for Preston, North concerning the legality of the Smith régime and his comments with regard to that régime.

7.28 p.m.

Mr. John Farr: My right hon. Friend the Member for Preston, North (Mr. J. Amery) said that most hon. Members in this House were jealous for the good name of our country, and I think that we all are. I remind him, however, that some of us have different ways in which the good name of this country of ours can be preserved. There are a good many of us who think that probably the energetic implementation of this succession of Orders presented by the Government on different days is the best way of preserving the fair name of our country abroad.
Before I go further, I believe that it is customary in these debates to declare an interest. I should mention that I have an interest in a farm in Rhodesia near the Kariba Dam. I should like to continue by posing to the Chief Secretary two questions concerning tonight's Orders. Is it the intention of the Government to apply these Orders energetically or are they merely producing them tonight in line with other Orders already produced


which are really nothing more than a public gesture and are designed simply to make an impression?
The Chief Secretary told us that the Board had been sufficiently established. He went on to say also that most countries—and he named one or two—recognised the new Board. But how are these Orders being physically applied? Are the members of the new Board in this country actively tracing the assets believed to be held by Rhodesia in South Africa and Switzerland to which my hon. Friend the Member for Nottingham, South (Mr. William Clark) referred, and has the new Board initiated legislation at least to control the use of these funds when they are traced in South Africa, Switzerland or anywhere else? If it has not yet initiated action in the courts of those countries, is it intended that it should energetically pursue the matter and really put a stopper on those funds being utilised by the illegal régime in Rhodesia?
Could I ask the right hon. Gentleman the Chief Secretary what the old Board is doing now? Has it vacated its offices in Salisbury and, if these Orders are going to be applied energetically, is it intended to take legal action in Rhodesia to obtain possession through the Rhodesian courts of the Reserve Bank offices in Salisbury?

Sir Douglas Glover: Send out Lord Poole.

Mr. Farr: I find it difficult to believe that a court in Rhodesia or anywhere else could deny the justification of a case presented on behalf of the legal Board in a court in Salisbury or anywhere else bearing in mind that the Reserve Bank was set up by the Southern Rhodesia Act, 1964, and a million pounds' worth of capital is held by the Government.
In Paragraph 3(a) of Order No. 2049 it is said that the Board may exercise the functions of its offices either in Rhodesia or elsewhere. Earlier on, the Chief Secretary was good enough to give us a list of names of the people who comprised the Board, together with the name of the new Governor, but how are they actually exercising their funtions now? It is all very well to trot out to the House a list of impressive sounding names, most of whom we understand are those of men of considerable experience in the financial

world. But what are they doing about their position and what energetic steps are they taking to take over the reins from the old Board, presumably still in Rhodesia?
I should like also to ask the Chief Secretary a little more about the old Board. Is it still functioning in Salisbury? Can he say if it is still in receipt of a salary and, if so, from whom the salary comes? Furthermore, who is paying the salaries of the directors of the new Board?
I want to apologise to the Chief Secretary for asking him these detailed questions but I believe that it is no use trotting out a succession of Orders to the House and thinking that we have made a gesture which may keep them quiet in the United Nations. It is no use presenting these Orders liberally bathed in eyewash. If the Orders are approved tonight I look to the Government to see that they are energetically and properly pursued to a conclusion.

7.34 p.m.

Sir Kenneth Pickthorn: Mr. Speaker, this is a sad occasion, perhaps rather sadder than the last occasion on which we discussed such Statutory Instruments. I should like, if I might, to have the attention of the Chief Secretary. I do not want to be more contentious than I must be, but with him I must, of course, be particularly contentious.
He told us when he spoke about
the special circumstances which now prevail",
as if they were weather which had happened. He told us that he had not attempted to explain the details, and one of his hon. Friends behind him who got up just now to help him told us that really we need not bother to go into the legal niceties.
I think that that is not only a mistake but that it is worse than a mistake: it is a misunderstanding of what all this is about. The legal niceties are highly relevant, but still more decisive are what I would call without, I hope, being too pedantic the supra-legal niceties.
Here we are, embarked with all-party agreement on sanctions which have received the general support of the House. I have never had any doubt that the illegal declaration of independence involved sanctions automatically, and there


they have got to be. Very few of us, if any, want to go back upon that now. But we are under obligation to recognise the disadvantages of sanctions.
Hon. and right hon. Gentlemen who have either used weapons or had weapons used against them will know that it is wise before combat begins to consider what are the potentialities for evil, either to their users or to their opponents, that the weapons have. The possibilities vary from weapon to weapon.
What are the disadvantages of sanctions? One of them is that they hit not only the chap that one is trying to hit but oneself, and a lot of third parties. I think that that has been generally admitted though perhaps not sufficiently considered in the House and hardly referred to at all, if ever, from the Treasury Bench.
There is another disadvantage in sanctions, and it is that if one is going to use sanctions in order to compel people to return to law and order, one is under stricter obligations than ever would-be litigants were who wished to get into the Court of Chancery. One must come with one's hands whiter than the driven snow.
To use sanctions of which one is doubtful, whether they are legally doubtful, whether they are constitutionally doubtful, even whether they are consonant with the Law of Nations or the Law of Nature, in order to compel a return to law and order, without being certain about that, and if one is a Parliamentary person to use such sanctions without that previous certainty and without feeling a duty to indoctrinate those whose votes one is going to ask for, seems to me to be a great betrayal of both the practice and the theory of Parliament.
I do not want to return to previous debate too long because it might be out of order, but I think it is in order to remind the House that the other day when we had arguments about the earlier Statutory Instruments, the main complaint of the critics was not really the Statutory Instruments themselves; it was that the Treasury Bench had not evidently and plainly done enough to make itself clear about the meanings and implications, and had certainly done little or nothing to make us clear. I think that it was widely felt that that complaint was not wholly unjustified.
I am sorry that the Attorney-General, who graced the Chief Secretary's performance today with his, I am sure, admiring and grateful presence—

Mr. Speaker: Order. I think that the right hon. Gentleman is a little too wide now.

Sir K. Pickthorn: Surely it cannot be too wide to say that I am sorry that the Attorney-General, although he was here for the first speech of the debate, left at once. I had thought perhaps to go on to regret that the Solicitor-General had not left, but I quite see that there might be some objection to that.
"A detailed examination of the legal and constitutional points is absolutely vital." That is what the Prime Minister said: he told us that it was vital to us, not to the Rhodesians or to the United Nations. He told us that it was vital to us that these legal, and what I ventured to indicate by using the phrase supra-legal, questions should be understood by the Treasury Bench and explained to us by the Treasury Bench. As the Chief Secretary himself remarked in his speech today, he did not attempt to do that, and nobody so far has attempted to do it.
I do not want to go over again, but I must refer again to, the remarks which have been made by my hon. Friends and others about our position as sterling bankers, or as reserve bankers, as someone else put it. We have had no explanation of what are felt to be the risks inherent in the potentiality of these two Statutory Instruments, to our position as bankers, to our State's position as banker, to the position of the Bank of England as sterling bankers, and to the position of other British banks, insurance companies, and so on.
Is this piece of delegated legislation, as many financial experts believe it to be, in effect something new in the history of the relationship between British authority and British credit? Is there anything new about it? To me it seems that there may be, but I do not pretend to understand such things thoroughly. If there is the least temptation or excuse for thinking that it is, it is a matter which should be fully expounded and closely justified by Ministers.
I am surprised at the frivolity with which this question has been treated, involved, as heaven knows, in a great and tragic issue. I hope it will be felt that, both financially and legally, and because of the general question of the international and traditional morality of behaviour in these things, however right these orders may be, and however indispensable they may be, I hope it will he felt that the House ought not to be asked to swallow them without having had a much fuller and clearer justification than has yet been offered.

7.43 p.m.

Mr. Leslie Hale: I want to try to deal with one or two points only, or to submit my own humble views about one or two points. The hon. Member for Nottingham, South (Mr. William Clark), who spoke from the Opposition Front Bench, made a singularly able and temperate statement in which he called attention to a considerable number of problems which arise in connection with Rhodesia. Who is responsible for paying the interest on Rhodesian loan? I thought that when he came to trustee stocks, and so on, he appeared to attribute rather more importance to trustee stocks than the Tory Government did to the 3½ per cent. War Loan, or 2½ per cent. Consols, which dropped by about half during their 13 years. This was a problem which I had to face. On the advice of my bankers I advised people to buy 3½ per cent. War Loan, and they still want to know what has happened to half their money.
Many of the people who paid National Insurance still want to know why the Fund was worth 100 million quid less at the end of the Tory Government than now, 100 million quid less than the amount put in. If Charles Clore had had it, it would have been worth about £1,000 million more, so do not let us get too sentimental about trustee stocks, although I have always been a little sentimental about them because, as a solicitor, I used to have to give advice about investment, which I was incompetent to give, but I passed it to the local bankers and I did not always think that they were much better.
The hon. Member for Nottingham, South said that this was rather a bad bargain He said that we may have to

pay this. We are guarantors for the World Bank loan. If the Rhodesian Government do not pay it, we have to. Listening to him, and listening with great respect and thinking that in the in-fighting he was making a point which might be damaging to Her Majesty's Government, it seemed that there was an underlying fallacy in everything that he said. The underlying fallacy is that these consequences do not flow from these Instruments. Apart from the hon. Gentleman's point about lack of respect for reserve banks, and so on, with which I am incompetent to deal, the consequences do not flow.
Of course we would have to pay the interest on the Rhodesian loan in the end if there were no settlement. Of course in the end it will probably be part of any settlement. Of course when there is a Government in Rhodesia, whether it be white or black or piebald, they will have to reassume their obligations, and for the moment we are responsible on our own thesis. In all her history Britain has been apt to be a little pompous about these things. I remember Britain lecturing the Bolshevik Government as they then called it. I think that there was a Press campaign about "Red Petrol" as a result because they did not assume the financial responsibilities for the Czarist Government which locked them up and transported them to Siberia for so long that they became a little dissatisfied. It goes back also to the Confederated States of America, defeated by what were then known as the Yankees, when we were a little pompous too about the payment of alleged international liabilities.
I am not talking about whether it is necessary to pay them immediately or not, but there is little advantage in bringing it down to the widow's mite. The hon. Gentleman said that a lot of people owned 100 quids' worth of shares and that these people might be terribly hard up, but for the moment they are not jeopardised except for the immediate payment of £5 or £6 and saving a couple of quid Income Tax on it. It is not in that case going to be a terrible hardship to leave these matters to be sensibly and properly adjusted when the moment for sensible and proper adjustment arises.
I say again that the hon. Member for Nottingham, South put his case temperately and without any unnecessary controversy. He raised a series of important


points which one would wish to clear up as soon as possible. He raised the question of the position of British bankers in Salisbury, and so on, but the decision not to recognise U.D.I. was an all party decision which we inherited from the party opposite. There has never been much controversy about that except on what used to be called the lunatic fringe of both sides. I have always been a member of the "lunatic fringe" on this side and I cannot use those words in any sort of general reproach. I have always been referred to as being on the lunatic fringe particularly when I agree with my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot).
This was an all-party decision, and when the Prime Minister was called on to implement it, it is more than probable that he more than anyone else realised the many difficulties which would confront the Government in implementing it. He went out to Rhodesia uninvited, and took a courageous decision which I think is unprecedent in any political history. I can recall no precedent for a Prime Minister of a great country like Britain going out there, risking failure, risking being received with contempt, and negotiating as he did in a desperate effort to find a last-minute way out of a problem which we all now know is not an easy one. All of us now know that this involves taking decisions which could well occupy international courts for years. If ever an international court were called upon to apply itself to the law of States in relation to de facto Governments and de jure Governments we might have litigation for years.
I do not envisage this. This problem will be solved quite automatically and not with very great difficulty when Rhodesia is prepared to revert to the 1961 Constitution and is prepared to produce a Government which can negotiate. The rather hypothetical problems which have been referred to will cease at that moment.
Let us at least give credit to the Prime Minister—for whom, at the moment, I feel increasing respect and rather less affection—for taking a tremendously difficult decision, knowing the facts. The evils to which the hon. Member has referred flow from the inevitable decision

forced upon him by the almost unanimous will of the House, and if he saw a little further than some of us did at that time it is a little unfair to complain now about consequential actions. I would have thought that this Measure was consequential; the hon. Member slightly destroyed his argument by putting the old alternative plea—which is respectable in the courts in some cases but not terribly respectable here—that "if 'twere well done 'twere better it were done 21 days ago, or 21 days, two hours ago".
It is apparent that great effort was needed to get the bankers to participate in this singularly unhappy exercise, and it is great credit to the Prime Minister that they have done it. No one can say that anyone who accepts the task of administering this affair does so other than out of a sense of duty, and it is not an easy or pleasant duty to perform. We could hardly expect that this could be arranged on the telephone, at five minutes' notice.
The House is justified in thinking that in this Measure, which has its difficulties, we are merely taking a necessary and inevitable step in implementing an all-party decision, arrived at before this Government took office, and inevitably precipitated by Mr. Smith's declaration of independence.

7.53 p.m.

Mr. Norman Buchan: One of the fortunate things about being on this side of the House is that one does not often have to follow my hon. Friend the Member for Oldham, West (Mr. Hale). Now, however, owing to the peculiar circumstances, I find myself in this almost impossible situation. One of the difficulties is that when one listens to my hon. Friend's arguments one tends to forget one's own point of view.
My hon. Friend was correct in saying that every speech made from the benches opposite has attributed the events that have been made necessary to the action of the Government. We are told that the legality of some of these steps is doubtful—indeed, that the supra-legality of some of them is doubtful. When the right hon. Member for Carlton (Sir K. Pickthorn) raised the question of supra-legality I thought that we were at last getting to the kernel of the matter—to what really ought to be of concern to us—and to the question of the morality


of the thing. But we were merely told that we cannot apply these sanctions unless our hands are whiter than white, the suggestion being that the pale hands of the Rhodesians we love are whiter than white in this situation. The action that we are taking stems entirely from the illegal action of Mr. Smith and his fellow rebels.
I regret not merely the fallacy which my hon. Friend has pointed out in the argument of the hon. Member for Nottingham, South (Mr. William Clark); I regret even more the fact that from first to last he said not a word in recognition of the necessity for these steps. There was not one word suggesting that the party opposite backed up, even in general terms, the action forced upon us by illegality. On the contrary, every word he used was a word of criticism, designed to make more difficult the operation of these matters, purely in financial terms. We were told about the cost to us, and about the 22 days' delay. Was the hon. Member really concerned about the 22 days' delay—he wanted more effective action at that time—or was he more concerned to play his own game of party politics on this issue? He raised this question in the form of a criticism, but he said on a previous occasion that he wants more effective action. That did not emerge from the rest of his speech. Does he really want stronger and quicker action? We are not given an answer. We thought that the Tory Party was split on this issue, but it is slowly being united on it, largely on the terms put forward by the right hon. Member for Preston, North (Mr. J. Amery).

Sir Godfrey Nicholson: On a point of order. When Mr. Speaker was in the Chair he kept the debate within narrow limits. I know that many hon. Members would have liked to widen those limits if they had not been kept within them. Is it to be understood that the debate may now range very widely?

Mr. Deputy Speaker (Mr. Roderic Bowden): I am watching the hon. Member for Renfrew, West (Mr. Buchan) very carefully. He has now neared the border.

Mr. Buchan: My hon. Friends are pointing out that I come from very far north of the Border. The question of

legality has been raised. The important point to remember is that we are the legal Government. The question of legality does not arise in connection with our actions. That is being forgotten. Somebody suggested that we were the effective Government, but that is a different point.
The whole purpose of these Measures is to put us in the position of becoming the effective Government. I very much regret that in this extremely grave situation hon. Members opposite, on both the Front Bench and the back benches, have not seen clearly and plainly where their national duty lay, which was to recognise the supra-legality of measures such as this, and to participate in the full backing of the people of this country for the attempt to deal with this situation quickly and effectively. This one would have expected; this we have not got this evening.

7.58 p.m.

Mr. William Shepherd: I will not detain the House for long as I have picked up a considerable cold. I support these Orders and urge upon the Government what my right hon. Friend the Member for Harborough (Mr. Farr) said with such effectiveness, namely, that they should be discharged with the utmost rigour. I say this because I have just come back, together with some of my hon. Friends and some hon. Members opposite, from a very friendly countryLibya—where I was much impressed by the feelings of that nation, which is disposed towards us in the most friendly way. Any vigorous action which we take will make it much easier for us to preserve relations both of friendship and trade with neutral countries like Libya.
I agree that these Orders create difficulties. In them we have some of the shadow and some of the substance, and it is always difficult when this condition obtains. But the difficulties which have been adumbrated by the hon. and learned Member for Northampton (Mr. Paget) and my right hon. Friend the Member for Preston, North (Mr. J. Amery) are not very real. I asked the hon. and learned Gentleman, in order that he can enlighten me—because I was not able to follow him too well—to show how the Orders, in their 11 days' existence, have affected


the strength of sterling and the level of foreign deposits in the United Kingdom. This was not a foolish or unreasonable question. Of course, if Orders of this kind are to have any effect, the effect would be immediate—[An HON. MEMBER: "Why?"] Because financial effects always are, and they flow back after a period. The hon. and learned Gentleman, with some lack of courage, referred me to some of my hon. Friends for the answer. I hope that when he makes further statements to the House he will at least attempt to make them on the basis of some solid information which he is prepared to give.
The other criticism both of the hon. and learned Member for Northampton and of my right hon. Friend the Member for Preston, North was that this action would cause a loss of prestige for Britain among the nations of the world. I should like to ask the House to consider the reaction to the Orders. I understand that they have been received with some caution in South Africa, and I believe that Portugal is a little concerned about them. However, I know of no other nation which is in serious doubts about their legality or desirability. I have no doubt that the Swiss Government, in pursuit of a financial policy which is not entirely commendable, but which brings Switzerland a great deal of revenue and is therefore economically justifiable, I suppose, will have second thoughts about their reaction to the new board.
I reiterate that no sound, solid, worthwhile financial Power in the world has criticised either the legality or the desirability of the Order. Therefore, one can dispose in relatively few words of the objections raised by the hon. and learned Member for Northampton and my right hon. Friend the Member for Preston, North.
I want to deal with the question of whether this action is justified, particularly in the sense of whether it will hurt us more than those whom we seek to influence. This will do damage to us. We cannot proceed along the line to which both parties are dedicated in this respect without imposing some harm on our own economy. But if we take the view that, in the pursuit of what we believe to be right, we should never

make any sacrifice, we shall achieve no result.
Any doubts which are cast upon the validity of the Orders or of any other measures which we have taken increases resistance in Southern Rhodesia and doubts about our policy in the Commonwealth. Those who, for one moment, question the intention of the Order are prolonging the agony in Rhodesia. If there is behind the Orders a firm and resolute determination to see that this does not happen, this will be in the best interests not only of this country but of Rhodesia.

8.4 p.m.

Mr. Stephen Hastings: These Orders are a grave matter, and the House has a right to know their practical effect on our economy and what objectives it is claimed they will achieve. I hope, on both these counts, that the questions raised will be satisfactorily answered when the right hon. Gentleman winds up. I do not want to labour the financial side—I am no expert—but I should like to know what will be the cost to this country of the liabilities which we are taking over. There is the servicing of the World Bank loan and the dividends on the Rhodesian loan stock: figures of £11 million and £26 million have been mentioned, and there is a vast discrepancy between the two. It seems that this on top of the costs of the other sanctions which we have already carried out amounts to something of which the general public and this House should be aware.
My main point is about the effects which those Orders are designed to achieve and whether they will achieve them. It appears from the Prime Minister's statement last Friday that the Government are aiming at something approaching unconditional surrender. I hope that this is not so: I say frankly to the Secretary of State that it would be a very foolish aim. But, whatever end is envisaged, we are told that the Orders are necessary in order to bring about a sharp effect in the shortest possible time. They crown the other sanctions, which presumably means that they are intended to cause Mr. Smith to give in in the shortest possible time. Now, I am disturbed by two questions: how sharp an effect is necessary and how short is a short time? We


should have some idea—the Government should have some idea—about these things.
We are told—it is suggested in the newspapers by columnists who have studied the matter deeply—that the maximum bite will be imposed in the new year and that Rhodesia should be in grave economic trouble by about March. This may be so, but does it follow that the Rhodesians will give in? Suppose that Mr. Smith's régime is still struggling along in June or July. These Measures represent virtually the financial maximum. What if they fail? What will be done next?
It seems to me that the policy of which these measures are the crowning feature, and ought to be the most effective aspect, are based on two assumptions. The first is that, as soon as they experience physical discomfort or financial difficulty, the majority of the white Rhodesians will desert Mr. Smith. But what persuades the Government that this will he so? From the information which is arriving and which has been available to all of us since U.D.I., one must recognise, whether we like it or not, that this is a true national movement. There is nothing in the British or Dutch Rhodesians to suggest that they give in easily. On the contrary, there is much in their history to suggest that they do not.
They live a harder physical existence, by and large, than we do, and they are convinced, rightly or wrongly, that the very survival of their country is at stake. They will fight on, just as we would if we were convinced, in different circumstances, that this was so. I believe that it is folly to imagine that the white Rhodesians will give up because of financial stringency alone, which is the intention behind the Orders.
The second assumption is that there exists a significant number of white Rhodesians who approve of the Orders and of this policy and who are presumably abetting it and who will be ready to co-operate with Her Majesty's Government in the direct rule of Rhodesia from Whitehall as soon as the Smith régime gives in. But who are they? The names of Sir Roy Welensky, Mr. Evan Campbell and Mr. Winston Field have been mentioned. They are all eminent Rhodesians and opponents of Mr. Smith,

in varying degree, but none of them shows the least inclination to take up this position and none of them would entertain the idea of direct rule from Whitehall—the first time this would have happened in Rhodesia's entire history, incidentally—in any circumstances.
I believe that these assumptions are in danger of being completely false. If they are, I can see very little point in the Orders before us tonight.

Mr. Thorpe: Am I not right in saying that hitherto the hon. Gentleman has seen fit to vote for all the measures which the Government have brought before the House, whatever reservations he might have had? Can we take it from his remarks that we are not to have the benefit of his support tonight on these Orders? If, however, he is going to support them, why will he do so in view of the remarks he is making?

Mr. Hastings: If the hon. Gentleman will be patient and wait for just a minute or two he will find that before concluding my speech I will give him the benefit of such advice as I have to offer on this subject.
It was, as I saw it, the duty of hon. Members to support the general measure in the first place because to oppose it would have been to condone illegality. It is no part of the duty of any hon. Member of this House to do that, whatever his reservations or views. But equally, it is necessary as time goes on in this tragic affair, as it develops and changes from day to day, to examine everything that is brought before us by the Government. That is what I am endeavouring to do.
I believe that the only sane course is to initiate discussions now, before the situation slips totally out of control. With every day this may become more difficult, but I believe that a settlement could now be reached. Mr. Smith has said that he is ready to talk. There must be give and take on both sides——

Mr. Deputy Speaker (Mr. Bowen): Order. The hon. Gentleman is getting rather wide of the Orders we are discussing.

Mr. Hastings: Only one sentence of my speech remains. I am sure that no one who understands the gravity of the situation which is facing us in Rhodesia


would think less of the Prime Minister if he took the initiative. I beseech him to consider this.

8.13 p.m.

Mr. Michael Foot: No one can quarrel with the proposition included in the speech of the hon. Member for Mid-Bedfordshire (Mr. Hastings) that the House of Commons has the right, indeed the duty, to examine these Orders in detail and to discover exactly what will be their consequences and effect on the economy of this country and on the situation in Rhodesia. We have every right to make that examination and hon. Gentleman opposite, cannot fail to reach would be improper for us to let these Measures go through without examining them and inquiring into their exact purpose. I am glad, therefore, that the Government have provided proper time for that examination to take place and I hope that all the future Measures which will come forward to deal with this subject will be examined in the same way.
Having said that I do not complain about that, I must say that anyone who has listened to the debate and has read of the events happening outside the House—in Rhodesia, Africa, the United Nations and elsewhere—and who contrasts what is being said and demanded there and in the House by some hon. Gentleman opposite, cannot fail to reach the conclusion that the House of Commons as a whole is not living up to its reputation in this matter.
Let us first consider the question of certain hon. Gentlemen opposite who, as the House and the whole country know, are opposed to the Government's measures but who have never taken the step of actually opposing them in the Lobbies. That applies with even greater force to these measures than to the previous ones. Not a word was said by the hon. Member for Mid-Bedfordshire in support of these Measures. Not a word was said by his right hon. Friend the Member for Preston, North (Mr. J. Amery) in support of them. I do not think that the same can be said of the spokesmen on the Opposition Front Bench, and there are one or two other hon. Gentlemen opposite who have spoken in support of the Orders.
The whole sense of the speech of the right hon. Member for Preston, North was that in his view these measures are wrong and that they will not assist the position in Southern Rhodesia. The hon. Member for Mid-Bedfordshire indicated that in his view they would interfere with the possibility of getting negotiations started on the terms desired. If that is what they think about the Orders they should vote against them, for it would be better for the health of the country and the health of the policy which the majority of the House wishes to carry through if they expressed their position in the Lobbies. Then everybody in Britain and in Africa would be able to attach to their statements exactly the significance they deserve.
The kind of debate we are having on these Orders, as on previous Orders, can cause—indeed, has caused—considerable damage in Africa. If a Government are putting forward Orders of this nature and there is a debate in which a large number of hon. Members say, in effect, that they are opposed to them, that they do not believe that they will accomplish anything, that they hope that they will not do so or that in spirit they are opposed to them, then at any rate part of the purpose of the Orders is removed. I say that because instead of the House of Commons making it clear to the people of Africa, whether in Southern Rhodesia or in the neighbouring countries, that it is determined in its policies, the whole position is blurred, and I have no doubt that that is the intention of the right hon. Member for Preston, North. He wants the will of the House of Commons to be blurred in Africa so that the people there will not know whether or not Her Majesty's Government are determined to carry through their policy of bringing down the Smith régime.
That is why I intervened when the right hon. Gentleman was speaking and when he referred all the time to the prime Minister's "adventure in Southern Rhodesia". The right hon. Gentleman knows that he used that phrase in a pejorative manner. That is what is being said by some people in Rhodesia, as reported by the noble Lord the Member for Berwick-upon-Tweed (Viscount Lambton) in the Evening Standard the other day. He reported that Mr. Smith


always refers to the policy as "Mr. Wilson's policy" when it is not Mr. Wilson's policy but the policy of Her Majesty's Government and the House of Commons. It is the policy which the right hon. Member for Preston, North has supported.
The right hon. Member for Preston, North cannot carry on this game any further. He must make up his mind whether he is prepared to vote for the policies which he advocates. That is the only honourable course open to him. He should vote in the Lobbies according to the views he holds on this matter. He regards the subject as of great importance and I am sure that he speaks with sincerity——

Mr. Deputy Speaker: Order. I would be grateful if the hon. Gentleman would Ret closer to the Orders under discussion.

Mr. Foot: I did not think that I could be any closer to them in discussing how the right hon. Member for Preston, North will vote on them. If I have strayed in earlier parts of my speech, I certainly thought that at the moment I was hitting the nail on the head.
Hon. Gentlemen opposite who are fundamentally opposed to the Orders and the whole policy of the Government would perform a service to their reputation as well as to the country if they carried their views into the Lobbies. Then we would all know how much support there is in the House for their alternative policies.
The procedure of blurring the issue and not permitting the people of Africa an opportunity to know whether or not the policy of Her Majesty's Government is the policy of the country is extremely dangerous, not only because of the effects in Southern Rhodesia but, even more, because of the effects on the neighbouring countries, in particular on the country which undoubtedly in my view must bear the heaviest burden of all in this tragic affair, the Government of Zambia. That Government and President Kaunda must deal with a most difficult and complicated situation in which——

Mr. Deputy Speaker: Order. The hon. Gentleman must try a little harder to get closer to the Orders under discussion.

Mr. Foot: I am grateful that you give me credit for trying, Mr. Deputy Speaker,

and I will certainly continue along that course.
I submit that it is perfectly relevant for me to argue that the best course for this House to take is to show as plainly as we can how determined we are to support this Order. One reason why we should do so is that we want to make our will as apparent as possible in Africa and, in particular, amongst those countries which have to bear the consequences of our actions I was indicating that the Government of Zambia——

Sir G. Nicholson: On a point of order, Mr. Deputy Speaker. The present position is surely too extraordinary for words. In the earlier part of the debate our noses were kept to the grindstone, and we were confined most strictly, without an instance of tolerance, to talk about the Order—nothing to do with Zambia or with the conscience of the right hon. Member for Preston, North (Mr. J. Amery), or anything else. I hope that you will now keep the foot to the grindstone.

Mr. Deputy Speaker: The hon. Member for Ebbw Vale (Mr. Michael Foot) has heard that intervention on a point of order. I must now ask him to come closer to these Orders.

Mr. Foot: If anyone is responsible for widening this debate, Mr. Deputy Speaker, it is not I. Indeed, I was replying, I hope directly, to statements made by hon. Members opposite who have recently spoken. The hon. Member for Mid-Bedfordshire spoke of what he considered to be a proper condition for securing negotiations on Southern Rhodesia—something that I thought very wide of the Order. If I had been a pedantic kind of person I might have asked for your assistance in calling the hon. Gentleman to order, but I did not. And the right hon. Member for Preston, North concluded his speech by saying that he wanted to see measures taken by the Government—and I gather that this Order was not amongst those measures—that would assist the process of negotiation with Southern Rhodesia.
It is to that part of those speeches that I seek to reply, as I should have thought I had every right to do. Both the right hon. and the hon. Gentleman referred to the Prime Minister's statement of last Friday, and both said they hoped that the statement did not involve a demand for


unconditional surrender from the Southern Rhodesian Government. That seems very strange terminology. When the train robbers carried out their adventure——

Mr. Deputy Speaker: Order. I have shown the hon. Gentleman a considerable degree of tolerance. Now, I am afraid, he is straining my tolerance to breaking point.

Mr. Foot: I was using the train robbers as an illustration, Mr. Deputy Speaker, and I apologise if I have gone further than I should—although, sincerely, I did not imagine that I was going further, because these matters were raised in the rest of the debate. I believe that it is strictly relevant to the decision that this House now has to take of whether to approve this Order, in the sense that one of the reasons for passing the Order is that we wish to make—we on this side certainly do, as, I believe, do many hon. Members opposite—the determination of the Government as apparent as possible.
Not merely should we pass this Order but, in my opinion, many future measures will have to be brought before the House. As I said when we previously discussed this issue, the situation is very much more serious than many people imagine. This country is involved in a dispute the ramifications of which are enormous. I believe that the whole future of our relationship with African and Asian countries is involved in what is happening.
I come back to that part of my speech which, at any rate, was held to be in order, because I was not pulled up. As I said at the beginning, the contrast between what is said in this House and what is said outside it is something of which we should take notice, because this debate shows that this House of Commons as a whole has not yet understood how grave is the crisis facing the country, how speedy must be the action of the Government, and how determined they must be to follow one measure by another if we are to convince our friends in Africa of our will to carry out the policy.
This Order is one further measure in our plan to destroy the Smith régime in Southern Rhodesia. We think that it is impossible to maintain a situation in which Britain is a member of the Com-

monwealth whilst the Smith régime remains there. As has been said by the hon. Member for Mid-Bedfordshire, the Smith régime was set up and is supported by people who, he says, believe that they are a people, a nation, fighting for their survival. That is how the hon. Gentleman spoke.
I do not seek to dissent from his view of what many white people in Southern Rhodesia feel about the problem. Many of them think that the survival of their way of life is involved, but there are other nations surrounding Southern Rhodesia which also feel that their survival is involved—very much more populous nations. And most of the Rhodesians believe that their survival is involved in the overthrow of the Smith régime. So it is no good the hon. Gentleman——

Mr. Deputy Speaker: Order. The hon. Gentleman is now discussing the general position of the sanctions. He is not in order to do that and, if he persists, I must ask him to sit down.

Mr. Foot: I shall not proceed in that case, Mr. Deputy Speaker. It would be most indelicate of me to proceed in such circumstances, and I have no intention of doing so. But I suggest—if it is not in order, as I gather it is not, for us to discuss the full implications of this Order—that the best course for the Government would be to seek a genuine debate in the House in which we could have a genuine Division, in which people decided that if they voted for the policy they voted for its consequences as well and, if they did not like it, voted against it. But let them not blur the issue in this House, or blur the issue in Africa, and thereby injure the possibility of carrying the whole policy through to a successful end.

8.27 p.m.

Sir Charles Taylor: I in no way condone the illegal action of Mr. Smith but I am definitely opposed to these two Orders, and I shall try to show why. We have to realise that the ultimate sanction must be force. If we introduce sanctions of this nature against Rhodesia, eventually, if they do not succeed, we have to resort to force. I understand that that is a point of view with which I could never agree. I understand the point of view that some people


might take, that it will eventually be necessary to resort to force. In his interview with the Daily Mirror the Prime Minister said that he had no intention of using force against Rhodesia.
I happened to see a friend of mine today who has three sons. This is quite a human story. Two of them are twins and the third is a younger son. One is serving in Zambia——

Mr. Thorpe: On a point of order. Can we know what the relevance of these twins is to this debate?

Sir C. Taylor: Perhaps the hon. Gentleman would wait until the story develops and then perhaps he will see the relevance. One son is serving in Zambia, one in Rhodesia and the other is with the British Army in Aden. [An HON. MEMBER: "Three twins."] No. One is with the British Army in Aden. The one who is serving with the British Army in Aden is under call to go to Zambia. It does not need me to go on very much more with this story to show the human tragedy that is facing this family.

Mr. Deputy Speaker: The hon. Gentleman must get a little closer to the Reserve Bank of Rhodesia.

Sir C. Taylor: If I may come back to the Order, I should like to ask one or two questions about the Reserve Bank. First, I want to know what the liabilities of the Reserve Bank are and in which countries there are liabilities. Secondly, I want to know what the funds of the Reserve Bank are in total, what funds are in Rhodesia, what funds are in this country, what funds are in Switzerland and what funds are in other countries. I strongly suggest that it might be appropriate for the Government to produce a White Paper giving us a few details about the Reserve Bank so that we might know a little more about it.
My hon. Friend the Member for Mid-Bedfordshire (Mr. Hastings) asked what the old Board of the Bank was now doing. I can tell my hon. Friend that the old Board, the former Board, which has been sacked, is in close conversation with the gnomes of Zurich, the Swiss bankers. The Swiss bankers are advising what is called the old Board. What is the new Board doing? I understand that it is still looking for offices. What is more, it has

very little information about the Bank or its affairs.

Mr. Diamond: I should be grateful if the hon. Gentleman would tell me where he gets his information from.

Sir C. Taylor: Afterwards. The hon. Member for Ebbw Vale (Mr. Michael Foot) asked whether we would vote in the Lobbies tonight. I shall not vote in the Lobbies tonight, because I do not want to give comfort to Mr. Smith. That is the only reason. I do not believe in sanctions. The only reason why I shall not vote in the Lobby tonight is that I do not want to give comfort to Mr. Smith's illegal Government.
The Government should withdraw these Orders. We should reopen negotiations at the earliest possible time with the Smith régime and try to find some peaceful solution.

Mr. Thorpe: It has been tried.

Sir C. Taylor: Let us try again. "Jaw jaw, not war war", as Sir Winston Churchill once said. That is what we ought to do. We should reopen negotiations with the utmost urgency, otherwise we shall find ourselves drifting into a state of war with the Rhodesian people and we shall completely ruin both the white and the native population Rhodesia in doing so.

8.33 p.m.

Rear-Admiral Morgan Giles: The hon. Member for Ebbw Vale (Mr. Michael Foot) spoke widely about the Order and the way in which it furthers the Government's policy. He defined the Government's policy as bringing down the Smith régime. He also defined it as destroying the Smith régime. This may be the policy which the hon. Gentleman and his friends would like to pursue. I should like to ask whether this is in fact the Government's policy. If it is not so, will whoever winds up for the Government tonight say quite clearly that it is not so and thus deny the sinister wing of their party?

8.34 p.m.

Mr. Peter Kirk: I shall detain the House for a very short time only. I wish to make it clear from the start that I fully support the Order. I have a curious rather old-fashioned feeling that one intends the


natural consequences of one's acts and those who have supported the Government up to now must support this sort of Order. It seems to me to be a very simple proposition which I hope the House will accept.
I want to raise one point which I have raised in correspondence with the Chief Secretary. The right hon. Gentleman may not remember this, but perhaps he can deal with it. There are people living in this country who up to now have been paid pensions and dividends through the Reserve Bank of Rhodesia but who presumably, because certain funds of the Reserve Bank of Rhodesia are now held in Salisbury, cannot now be paid from that source. Is it the Government's intention that these people can be paid out of United Kingdom sources? In one case about which I have written to the right hon. Gentleman, the entire income of the person involved—a constituent of mine—depends upon this source. I should have thought that there was a fairly strong case for making up their income from United Kingdom sources because, after all, we do not want to inflict too many sacrifices upon people who have no other source of income.

8.35 p.m.

Mr. Iain Macleod: We have had a fairly calm debate. In a short speech, I should like to keep it that way. Perhaps I can concentrate on one matter which has gone to and fro in a number of speeches—the question of the powers of direction that can be given by the Secretary of State to this new Board. These two new Orders, which I am sure we shall pass tonight, are no doubt largely technical, but it is also true that they have implications which affect our good faith as a country and I hope that the Chief Secretary will give us some assurance on this matter.
I should like to make one thing absolutely clear, and I am sure that everyone who has spoken will agree with me. We have heard no criticism tonight of this new Board, neither of Sir Sydney Caine nor of the members. They are people of the highest reputation and—this should be said—what criticisms there are are criticisms of Her Majesty's Government. I am sure that Her Majesty's Government equally would prefer it that way.
I am not sure that I agree with the hon. Member for Oldham, West (Mr. Hale), who said that what we are discussing today is consequential on earlier decisions, because, for one particular reason, this is a major change of policy The policy of Her Majesty's Government at the beginning, immediately after U.D.I., which is universally condemned in the House, was to leave as many as possible of the internal props there. I am not arguing whether this was wise, but the police, the Civil Service, the banks and so on were left. Therefore, this Order is clearly a change of policy and, whatever we think of it, we cannot refer to it as consequential on earlier acts. It should be justified on its own merits.
One main charge we should make. If I can take the words of the hon. Member for Devon, North (Mr. Thorpe), paraphrasing him slightly, he said that if we took over the assets of a concern we should also take over the liabilities. This country has to be specially careful about this. The hon. and learned Member for Northampton (Mr. Paget) was quite right when he talked about our central position as bankers. There was some dispute between him and my hon. Friend the Member for Cheadle (Mr. Shepherd). It is perfectly true, as my hon. Friend said, that there has been no immediate effect of sterling traceable to these events, but I think that he takes rather too lightly the fact that this is the first time that there has been a default on British, Commonwealth or Colonial stock. I do not take this as a light matter, and I am certain that the Chief Secretary does not. The Chief Secretary may feel, for reasons which he may advance, that he has to justify it, but that is quite a different matter. He must be very worried at the Government's position.
What is the Government's position in this? We have it clearly and it will be in Hansard tomorrow—from a Written Answer today by the Secretary of State for Commonwealth Relations to my right hon. Friend the Member for Flint, West (Mr. Birch), who asked, in effect, why although the right hon. Gentleman has powers he has permitted default. The right hon. Gentleman replied—and I leave out the opening words—that the Government of the United Kingdom
has not assumed the government of that country"—


that is, Southern Rhodesia—
and has not in any way succeeded either to the assets or the liabilities of the Government of Southern Rhodesia. It is not for the British Government to intervene in a situation where interest payments of Rhodesian public debt in this country have been stopped as a result of the illegal actions of Mr. Smith and his colleagues on 11th November.
I am bound to say to the right hon. Gentleman that that Answer is simply not true. I believe that the hon. Member for Renfrew, West (Mr. Buchan) was right—though I do not agree with some other things that he said—when he said that we are the legal Government. He is right. We are. But if we say that the Smith régime is illegal, as, of course, it is, we cannot go on to say, "But it is illegal only for certain purposes", when it happens to suit us.
The Secretary of State must accept responsibility here. Whatever the de facto position may be in Rhodesia, the de jure position—there can be no doubt about this—is that Her Majesty's Government have in any case, or have assumed where they had not got it, power of direction in relation to Southern Rhodesia. The Secretary of State will know that Article 4(1,a) of the Southern Rhodesia Constitution Order, 1952, provides that executive authority of Southern Rhodesia may be exercised on Her Majesty's behalf by a Secretary of State.
My hon. Friend the Member for Nottingham, South (Mr. William Clark) quoted the words of a prospectus this afternoon and asked whether a direction had been given. It is quite clear that it is the responsibility of the Government of Southern Rhodesia to make these payments. In my view, it is equally clear beyond doubt that we—when I say "we" I mean the British Government and Parliament—have this responsibility and it is not one which we can avoid. My hon. Friend quoted The Times. Perhaps I can give this quotation from last week's Economist which puts the matter accurately and exactly in perspective:
Technically, the responsibility belongs not to Sir Sydney Caine's Reserve Bank—the agent for these loans in the past has usually been a commercial bank rather than the Rhodesian Reserve Bank. Formally, therefore, it is held that any London decision to pay up on Rhodesian loans was for the Treasury rather than Sir Sydney Caine. These rather meaningless technicalities aside, the interest should surely have been paid: either London is responsible for Rhodesia or it is not.

I am sure that that is right, and I am sure the matter of the Government's good faith is involved here. The sum involved on the default on 6th December was £87,000 for about 1,500 people. There is a further payment due tomorrow, and I imagine that the Chief Secretary will once more confirm that there will be this default. It seems to us to be a matter of principle of great importance.
Apart from the general points I make, I ask the Chief Secretary for a specific undertaking that the Government will meet the interest payments on Rhodesian loan stock. But I think it important, particularly in view of some of the observations which have been made, that the House should be in no doubt of our feelings on this matter. If we are given such an assurance, well and good. I did not agree with the doctrine of opposition advanced, with, I thought, less than his usual logic, by the hon. Member for Ebbw Vale (Mr. Michael Foot). Criticism, of course—that should always be part of the essential functions of the House of Commons. But if, as in this case, we feel strongly, as we do, on one particular issue, there may yet be reasons, as I believe there are, why it would be quite wrong to pursue those objections into the Division Lobby. This was put very clearly by my hon. Friend the Member for Eastbourne (Sir C. Taylor).
I am quite sure—here I agree with my hon. Friend the Member for Cheadle—that in the countries involved, or at least in most of them, there has generally been no particular criticism of this measure. It would, therefore, be quite wrong to divide the House on this issue tonight because of one's anxiety about a matter of good faith, and I hope very much that there will be no Division. I go further. I hope that we shall get through the whole of this Rhodesian crisis without a Division in the House. But that is a matter for the future, and we must never feel inhibited as an Opposition from putting properly constructive comments and criticism by the sort of speech which we have had directed against us by the hon. Member for Ebbw Vale.
On this particular point, we think that the Government are making a misjudgment similar in nature, if different in magnitude, to the mistake which they made over pensions payments, which the


whole House was delighted to hear the Chancellor of the Exchequer put right this afternoon. That was warmly welcomed. There were no recriminations, for the House is always generous in these circumstances. We took the Government's change of heart at once and were delighted.
Equally, if the Chief Secretary to the Treasury wants to come to the penitent's stool on this issue, we shall be happy to receive him in a similarly grateful way. But I am not hopeful. However, for the reasons I have given, I believe that it would be wrong for the House to divide tonight. Equally, on the general case, we accept that the Government wish to see a solution by conciliation and negotiation. It may be difficult now to see how that is to happen or when it will be achieved, but both sides of this House wish to see such a solution.
But, as my right hon. Friend the Leader of the Opposition made clear on Friday, we do not believe in policies which may be read, even if they are not intended, as demands for unconditional surrender. I am sure that we will be returning perhaps many times to these wider issues after Christmas, but in the meantime I think it would be wrong, whatever the answer may be tonight, for the House to divide tonight. I hope that we will have no division. I hope that the Chief Secretary will feel able to give me either the whole or part of the undertaking for which I have asked.

8.46 p.m.

Mr. Diamond: I should first like to echo what the right hon. Member for Enfield, West (Mr. Iain Macleod) has said—that it would be our hope that we should get through the whole of this crisis without a Division in the House. Perhaps I can go even further and say that the Government have not the slightest doubt that, if we do get through without a Division, we shall get through all the quicker because there is no question but that the views expressed in this House, particularly in the Division Lobbies, are of extreme relevance to the attitudes in Rhodesia that we are seeking to influence.
It would be wrong for me, and wholly inappropriate by virtue of the responsibilities which I carry, to attempt to do

more than answer some of the technical questions that I have been asked and which I will deal with as fully as I can, recognising, as the right hon. Gentleman wisely said, that we are bound to come back to these matters on many occasions. It would be straining your patience, Mr. Deputy Speaker, and the limits of order if I tried to place these two Orders against the full background and in the full perspective of the situation and of what is in the minds of many hon. Members in the speeches they make. I hope, therefore, that it will be thought appropriate if I merely concentrate on details of the two Orders and the important questions which have been asked.
First, I deal with the responsibility of the Government for what they have done, because this seemed to be underlying a good number of the criticisms that have been made and these have been based on a complete misunderstanding of the action taken and of the purpose and scope of the two Orders.
In the first Order, the Secretary of State has power to give the board directions. But that does not make the Bank the Secretary of State's agent so as to attract to him the liabilities of the Bank. Nothing like it. It is a very common case for statutory bodies to be made subject to directions from the Government but that does not make them agents of the Government and certainly does not make the Government responsible for their liabilities. There is no question of such an assumption of liabilities having taken place here, or of possibly being deemed to have taken place, as a result of the Government taking the power to give directions through the Secretary of State.
It is not a breach of the directors' duty if they comply with the Secretary of State's direction any more than if they comply with any other obligation laid upon them by Statute. So I hope that we can clear up that aspect. I recognise that the point put to me by the right hon. Gentleman just now was on an entirely different footing—on the question of responsibility, honour and other matters of that kind.

Mr. Thorpe: Can the right hon. Gentleman take this a little further? Are we to assume that the Secretary of State is to give directions that these liabilities


are not to be shouldered by the Bank, or are we to take it that the new board inherits all the legal liabilities of those whom it has replaced?

Mr. Diamond: The Secretary of State cannot give directions to a bank that it should not shoulder responsibilities which it has. If a bank has responsibilities, it has responsibilities.

Mr. Thorpe: He could order the Bank not to pay out.

Mr. Diamond: The hon. Gentleman says that he could order the Bank not to pay out, but that is not the question he asked me. A good deal of confusion has arisen by thinking of the Bank as some being other than it is. The Bank is there; it exists. Nothing has altered about the property of the Bank, its assets, its liabilities and so on. What has happened is that the names of the directors have changed. Secondly, the Secretary of State now has power to give directions to the Board.

Mr. Paget: Is it not the position that the liabilities for Rhodesian debts are the responsibility of either the Bank or the Rhodesian Government? If we take over the Bank and are the Rhodesian Government it does not seem to matter much.

Mr. Diamond: All we are doing is limited to ascertaining all facts about the Bank under the second Order and, under the first Order, taking power, which has been exercised, to suspend existing and appoint new directors. I can only repeat—and it is unusual that there is ever a noccasion when I have to repeat anything to my hon. and learned Friend the Member for Northampton (Mr. Paget)—that the appointment of directors is not and bears no resemblance to taking over liabilities. This is a situation which happens in other companies every day and must be well within the experience of my hon. and learned Friend.

Mr. Iain Macleod: The right hon. Gentleman would not deny that it is within the competence of the Secretary of State to give a direction to Sir Sydney Caine to meet this payment. If he accepts that, does he say that there is no responsibility upon Her Majesty's Government to do so?

Mr. Diamond: I do not know whether the right hon. Gentleman is now asking me what kind of directions may be issued in future, or what kind of directions have been issued in the past. That is an entirely different matter. I want to get clear on the ground floor first, that there is no question whatever of these Orders meaning that the Secretary of State, Her Majesty's Government, or anybody like that, has taken over any liabilities with which he has not previously encumbered.

Mr. R. H. Turton: Surely the making of the Order from 3rd December and the consequent action of the Bank of England prevented the payment of interest on 6th December. As a result of that, there must he an obligation on Her Majesty's Government to bond holders to see that the interest is paid.

Mr. Diamond: That is not even a correct statement of facts. Nothing the Bank of England did prevented the payment of interest to bondholders, and so the whole basis of the right hon. Gentleman's question goes.
I wonder whether it would be more convenient for me to deal separately with the major questions which the right hon. Gentleman asked about the payment of interest on a particular stock which, I gather, is of special interest to a number of right hon. and hon. Gentlemen and to deal with that in a moment. What I want to do for a moment is to get away from that, which is a quite separate issue, and first to deal with the effect of the Order rather than with any problems which may arise in giving instructions under the Order. I will certainly come back to that matter. [HON. MEMBERS: "Oh."] As there seems to be so much interest in it, it might be preferable to deal with it at once, having established, as I hope I have, that the mere fact of the Order does not encumber the Government or the Secretary of State with liabilities which did not previously belong there.
What the right hon. Gentleman is now asking is what instructions the Secretary of State may give in the future with regard to the carrying out of its duty by the Board. The first point is that this does not strictly arise on the present Order, because, so far as the payment of


interest on the stocks is concerned, the Reserve Bank of Rhodesia is purely an agent. The stocks are not the stocks of the Reserve Bank. The Reserve Bank is not liable to pay interest on them from its own funds. The position is that the board of the Reserve Bank has not received instructions from any of its customers to make these payments. The Order which we are now discussing, and for which I am seeking the support of the House, does not alter that situation in the slightest.
I hope that I have made the position absolutely dear. It is that the board of the Reserve Bank has not received instructions from any of its customers to make these payments. I am sure that hon. and right hon. Gentlemen will remember the dates and the point of time on which a statement was made in Rhodesia about the non-payment of this interest.

Mr. John Biggs-Davison: I am trying to follow the right hon. Gentleman. He said that the Reserve Bank was merely an agent. Could he say very clearly of whom is the Reserve Bank an agent?

Mr. Diamond: Of course. The Reserve Bank is the agent of its customers, like every bank is. No bank proceeds to dispose of the money which it holds without the request of its customers. If the hon. Gentleman was fortunate enough to have £200 in the bank and he went along tomorrow and presented a cheque and said, "I want to withdraw all of this" and it said to him, "We have paid out, we have paid out your rent because we thought you would like us to do it", the hon. Gentleman would have a word to say to the bank. The function of the bank is to act on behalf of its customers, and when the customer gives the bank instructions that is the time for it to think about them.

Mr. Biggs-Davison: Is the Reserve Bank not in a somewhat different position from a commercial bank? Is it not an agent of the Government?

Mr. Diamond: I do not know what question the hon. Gentleman is asking me now. Of course the Reserve Bank is different from an ordinary bank because its customers are, by and large, different from the customers of an ordinary com-

mercial bank. They are not Mr. Jones and Mr. Robinson—I had better not say Mr. Smith, it would create confusion. They are not the tradesmen who are the customers of the ordinary bank. The customers of the Reserve Bank are very often the Government and other bankers. That is the difference, but essentially a banker carries on the banking business of holding funds belonging to his customers and seeking instructions from the customers as to the disposal of those funds. If a customer does not give him instructions as to the disposal of the funds, the bank's duty is to hang on to them. That is the simple situation.
I hope that I have made that perfectly clear. [Laughter.] I never thought that it would fall to my lot to attempt to explain the elementary principles of banking to so distinguished a Member. I will proceed to deal with the effects of the Order on the Boards, both the new Board, as it has been called, and the old Board. I was asked what powers the new Board would have conferred upon it as the result of the 1964 Rhodesia Act. The answer is that the new Board will have all of the powers conferred by that Act. Whether it will make use of those powers is a premature question, as it is also to say to what extent the Board will think it right to do so.
I was asked whether the new Board is being active or whether it is a gesture. This gives me the opportunity to say that the new Board is very active. This is not done as a gesture; this is done for serious business. The new Board is very active and is getting on with all its tasks—any single task that any hon. Member has mentioned—and it is getting on with them with energy. It is no part of my duty—I am sorry to say this; I hope that the House will understand it—to disclose banking information. I am sure that that will be accepted in full.
I was asked by the hon. Member for Nottinghamshire, South (Mr. William Clark) what is the position of the old Board. The members of the old Board have been suspended from office, and their suspension is effective so long as this Order is in operation. During that time they are not entitled to any salary, nor is there any provision under which they are entitled to compensation. I am merely saying what the present position is. No doubt these matters can be dealt


with when constitutional Government is restored and the Order is revoked or lapses.

Sir K. Pickthorn: Would the right hon. Gentleman permit me to ask a supplementary question? Are they relieved from any disqualification for other jobs which may have been involved in being directors of the Bank when they were so effectively?

Mr. Diamond: I shall be only too glad to answer that question if the right hon. Gentleman will be good enough to write to me. I do not think that it would be right to attempt to consider off the cuff what the effect of this might be on all sorts of obligations which they might have and of which Her Majesty's Government have no knowledge. All I can say is that the effect of this Order is that they have been suspended, and whatever flows from suspension generally would flow from suspension in their case.
I have been asked whether action under these Orders will harm the position of the United Kingdom as bankers for the sterling area. There is no question of the United Kingdom having acted in any way improperly as bankers for the sterling area. We have gone to very considerable lengths to avoid doing that, and we have been completely successful, as I think the hon. Member for Cheadle (Mr. Shepherd) pointed out. The effect of these Orders has not been damaging in the slightest degree. It is only right for me to say that we act on the best possible advice from all sources available to the Treasury and to Her Majesty's Government.
One hon. Gentleman made the suggestion that the Bank of England had supported the Rhodesian £. That does not arise strictly in this debate, but the House will forgive me if I deal with it and say that the suggestion is absolutely absurd and that that did not happen. It may have been reported somewhere, but that does not affect the facts of the situation.
I have been asked why these Orders are delayed for 22 days. I was glad of the implication behind the question in the sense that officially the Opposition are anxious that we should get on with the job. We are very grateful for that kind of support. However, I am bound to reply that there are many measures which can be taken, some of which have

been taken, and some of which have not been taken yet. We do not propose to be put off by the knowledge that when we take a further measure in future hon. Members will ask why we did not take it 42 or even 82 days before, depending on the case. This is a moving situation, and we have to take whatever measures seem appropriate as the situation develops. It seemed appropriate to us that a number of measures should be taken on 3rd December, and that was the occasion for this one.
I think that I have dealt with most of the points put to me.

Sir Knox Cunningham: Before the right hon. Gentleman sits down, would he deal with the question of how Order No. 2049 will be considered under international law?

Mr. Diamond: With pleasure. I have carefully checked this. There is no respect in which international law arises. International law deals with the relationship between one state and another, I am informed, which is not at issue here. This concerns purely the domestic law affecting individuals and the capacity to search and receive information.
One hon. Member asked me about a pension payable from a Rhodesian company to a resident in this country. There is nothing, in the circumstances which he described, by which we are preventing that pension from being paid. It may be that there are other circumstances in Rhodesia which would prevent the payment being paid, but there is nothing in what we have done heretofore, or in these Orders more particularly, which affects payment of pension.

Mr. Kirk: I understand that it is a pension payable by the Rhodesian Government through the Reserve Bank which is not now being paid. I have sent the right hon. Gentleman details.

Mr. Diamond: I will look further into them. I can only repeat that from the information given to me during the debate there is nothing on our side to prevent that payment being made.

Mr. Paget: We are the Government of Rhodesia. As a result of these Orders we have in our hands the reserves of the Government of Rhodesia. Are we proposing to pay the debts of the Government of Rhodesia?

Mr. Diamond: My hon. and learned Friend makes these statements with clarity, but that does not affect their accuracy. It is absolutely inaccurate—I hope that my hon. and learned Friend will not mind my being quite clear in my reply—that we, the British Government, own the assets or funds of the Reserve Bank of Rhodesia. The assets and funds of the Reserve Bank of Rhodesia belong today exactly where they belonged before the Order was introduced. It has not affected that position one iota.
My hon. and learned Friend is giving unfortunate support to an allegation from Salisbury that we have confiscated these funds. That allegation was wholly wrong. What my hon. and learned Friend has said as the basis of his question was equally wholly wrong.

Sir C. Taylor: Presumably, the funds in the Reserve Bank belong to the depositors who have deposited funds with the Bank. Did those people have any say in the choosing of the new directors?

Mr. Diamond: I hope that I have made it clear that the new directors were appointed by my right hon. Friend the Secretary of State, who, as far as I know, is not a customer of the Reserve Bank of Rhodesia: he does not have an account with the Bank. It would follow from that that the customers of the Reserve Bank of Rhodesia were not so consulted. The appointment was made, as I said from the outset, by the Secretary of State.
We are now getting the kind of question which indicates that the more important questions have been answered. I hope that I have dealt as fully as would have been wished with the main questions that were put to me. I hope that I have explained the functions of the Orders. I can only repeat what the right hon. Gentleman has said and hope that the House will be good enough now to give us the two Orders.

Rear-Admiral Morgan Giles: Before the Chief Secretary sits down, will he please clear up the point—

Mr. Deputy Speaker: The Chief Secretary has sat down. The Question is——

Mr. Paget: I desire, Mr. Deputy Speaker, to ask the Chief Secretary who is the customer of the Reserve Bank of Rhodesia. Is that customer the Governor of Rhodesia? Are we the Government of Rhodesia?

Question put and agreed to.

Resolved,
That the Reserve Bank of Rhodesia Order, 1965, dated 3rd December, 1965, made by Her Majesty in Council under the Southern Rhodesia Act, 1965, a copy of which was laid before this House on 3rd December, be approved.

Southern Rhodesia (Bank Assets) Order, 1965, dated 3rd December, 1965, made by Her Majesty in Council under the Southern Rhodesia Act, 1965, [copy laid before the House 6th December], approved.—[Mr. Diamond.]

PROCEDURE

Select Committee appointed to consider the Procedure in the Public Business of the House; and to report what alterations, if any, are desirable for the more efficient despatch of such Business:

To consist of eighteen Members:

Mr. Arthur Blenkinsop, Mr. Channon, Mr. Donald Chapman, Mr. Michael English, Mr. Roy Hattersley, Mr. Eric S. Heffer, Mr. A. J. Irvine, Mr. James Johnson, Dr. David Kerr, Sir Hugh Munro-Lucas-Tooth, Dame Edith Pitt, Sir Martin Redmayne, Sir William Robson Brown, Sir George Sinclair, Mr. Julian Snow, Mr. David Steel, Mr. Thomas Steele, and Mr. Turton;

First Report of the Select Committee on Procedure in the last Session of Parliament referred to the Committee:

Power to send for persons, papers and records:

Power to report from time to time:

Five to be the Quorum—[Mr. Bowden.]

HOUSE OF COMMONS (SERVICES)

Mr. Walter Alldritt, Mr. Humphrey Atkins, Mr. David Griffiths, Mr. Godfrey Lagden, and Mr. Victor Yates to be Members of the Catering Sub-Committee:

Mr. Frank Allaun, Mr. Maurice Edelman, Mr. Ian Gilmour, Mr. Peter Kirk and Mr. Robert Maxwell to be members of the Library Sub-Committee:

Mr. R. Gresham Cooke, Dr. David Kerr, Mr. William Roots, Sir George Sinclair, and Mr. Julian Snow to be members of the Administration Sub-Committee:

Mr. Robert Cooke, Mr. William Hannan, Mr. Martin Maddan, Mr. Stanley Orme, and Sir Richard Thompson to be members of the Accommodation and Housekeeping Sub-Committee.—[Mr. Sydney Irving.]

FELLING BYPASS

Motion made, and Question proposed, That this House do now adjourn.—[Mrs. Harriet Slater.]

9.13 p.m.

Mr. Bernard Conlan: Mr. Deputy Speaker, I am grateful for the opportunity of initiating a debate upon what is known in the North-East as the Felling bypass. The bypass passes through my constituency, and it is giving a great deal of concern and anxiety to my constituents.
It may be that after the serious discussion that we have had today and the ramifications of the Rhodesia crisis, the subject of my Adjournment debate will seem relatively unimportant. But I can assure the House that to my constituents it is a matter of very grave and urgent importance, and there are a number of questions that I shall be putting to the Parliamentary Secretary during the course of my remarks.
The bypass was completed in 1959 and, though I may refer to the stretch of road as a "bypass", it really is nothing of the kind. One assumes that a bypass is a stretch of road which bypasses a town or village or something else, but the particular stretch of road with which I am concerned cuts through a fairly heavily populated residential area, and it is that situation which has given rise to the difficulties which I want to explain to the House.
I do not think that the problems which I am going to explain to the House are new to the Ministry of Transport, because ever since the bypass was opened the situation has given rise to complaints. Indeed, my predecessor was dealing with complaints arising from the conditions on this bypass from as far back as 1961, and when I succeeded Mr. Moody in October of last year I inherited the problems. I inherited a large file of letters from the local council to Mr. Moody, and from Mr. Moody to the Minister of Transport, and the replies in the opposite direction.
I think it is fair to say that, having read the correspondence which passed between my predecessor and the Minister of Transport during those years of 1961 to 1964, I get the impression that the Minister of Transport in those times treated what I contend is a very important


question from my constituent's point of view with complete and utter indifference, because although the requests which my predecessor made were reasonable, they were met all along the line with a complete refusal to do anything.
It is to the credit of the present Minister of Transport that from my beginning to deal with this problem after my election to this House, I received sympathetic and understanding consideration. It is also fair to say that I have made some progress with the present Minister. Not as much progress as I might have wanted, but none the less it is in contradistinction to my predecessor's lack of success.
I think that for the benefit of the House I ought to explain the problems. The road goes through a heavily populated residential area. In fact, it cuts in half the urban district area of Felling. On the north side of the road there is a large thickly populated residential area, and the people there are compelled to cross this extremely busy main trunk road when they go to the shops, when the children go to school, and when they go to church.
The accident rate on this bypass has been very high ever since it was opened. But what appals and alarms my constitutents and me is the tremendous increase in the accident rate this year. In a recent two-month period three people were killed in separate incidents. Two were schoolchildren, one coming home from school at lunch-time and the other returning to school after lunch. The third was a lady aged 77. This is a measure of the problem that now faces us.
There is another feature of the road which the House must understand. I have already referred to the people who live in this residential area, but there are two—perhaps three—other reasons why I want the road made much safer. First, on its northern side, in the Green Lane area, is situated the Government's industrial training centre, together with an industrial rehabilitation centre, where disabled people are retrained for new jobs. They are obliged to cross this road at least twice a day. Representations have been made to me from the instructors at both the training centre and the rehabilitation centre to urge upon the Minister

the need for adequate steps to be taken to secure a greater degree of safety.
This year the Minister has not been entirely unsympathetic to me. On 2nd July I received a letter from him in which he described certain road works which he proposed to authorise to make the roads safer. Those roadworks consisted of the installation of traffic lights at the junction of Green Lane with the bypass, together with ancillary works, such as the realignment of the pavements in the area and the making-up of the central reservation at the junction of Carlisle Street and the bypass.
In his letter the Minister explained that these road works unfortunately could not be completed, or even started, until a link road was constructed by the urban district council on the new industrial estate. I replied by saying that although I generally welcomed the initiative of the Minister in authorising these works I felt that they did not go far enough and that, in addition to those works, there was a need either for an underpass or a pedestrian footbridge at the Carlisle Street junction.
I am pleased to inform the House that, as the result of my further representations and since I asked Mr. Speaker's permission to raise this matter in the House, the Minister has sent me a further letter, in which he says that he, too, is appalled at the tremendous increase this year in the accident rate. He goes on to say that he knows how strongly I feel about this and that he also is distressed at the alarming rate of increase. He then said that, in view of this, he has now asked the Felling Urban District Council to prepare alternative schemes for either a subway or a pedestrian footbridge at the Carlisle Street junction.
I welcome this initiative. It seems that we are making progress in little stages, but this also is to be welcomed. Of course it will take time for the surveyor to the Felling U.D.C. to prepare these alternative schemes. It will take more time, presumably, for the Minister to give his blessing and sanction to one or the other. It will then take more time for the subway or footbridge—whichever is ultimately decided upon—to be constructed. In the meantime, I am afraid that more and more of my constituents will be slaughtered on this road.
I have a number of suggestions. I urge upon the Minister the real urgent need to complete work on the schemes for a footbridge or an underpass in the shortest possible time. Understandably this will be several months, but nevertheless, I urge upon my right hon. Friend the need for these works to be completed as quickly as possible. There is something else which the Minister can do much more quickly. I want him to authorise the installation of traffic lights at Green Lane immediately. I do not want to see any delay in the provision of these lights.
I do not accept as valid the arguments that we must wait for the industrial link road to be constructed between Carlisle Street and Green Lane: this road is necessary only because of the proposal to block up the central reservation. My suggestion, therefore, is that the blocking up of the reservation should be left until the link road is constructed. In the meantime, in order to ensure that the junction of Green Lane and the bypass is made safer, the installation of the traffic signals could proceed immediately. This is my second suggestion.

The Joint Parliamentary Secretary to the Ministry of Transport (Mr. Stephen Swingler): Perhaps I can assist my hon. Friend. There is no question of the installation of traffic lights at Green Lane being dependent on the link road. In the letter which my right hon. Friend sent to him recently—though he may have misunderstood it—it was not stated that one scheme was dependent on another. They are being considered separately and will be installed as quickly as is possible.

Mr. Conlan: I understood from that letter that the Minister was saying that while he approved of the installation of traffic signals at Green Lane, the scheme could not be considered in isolation. The inference was that the installation of the signals would have to wait until the link road had been constructed. I clearly recollect that that was the inference of the letter because on receiving it I immediately wrote to the Clerk to the Felling Urban District Council to inquire whether he could expedite the construction of the link road so that the Minister could proceed with the installation of the traffic signals.
If I am wrong in this respect I am only too pleased, because it means, if I understood my hon. Friend's intervention correctly, that the completion of the link road is not holding up the provision of the signals. I imagine, therefore, that my hon. Friend will now be able to say, "We will immediately authorise the installation of these traffic signals".
My third point is that on this road there are variable speed limits. On one section of it there is a 30 m.p.h. limit, on another a limit of 40 m.p.h. while on the third there is no limit; it is derestricted. When we were considering with the Minister the possibility of providing a surface pedestrian crossing at the junction of Carlisle Street my right hon. Friend told me—it was proper that he should do so and I entirely agreed with him—that the provision of such a crossing at this junction was impracticable and that instead of reducing the number of accidents would probably cause accidents because it would give a false sense of security to pedestrians.
It is at this very point of the road that we find the derestricted area. It is at this point that the motorist leaves the 40 m.p.h. limit and enters the derestricted part. This is one of the principal factors in making this spot the death trap that it is. I suggest, therefore, that there should be a speed limit on the whole length of the bypass which falls within the Felling Urban District area. I do not mind which limit is chosen, although in the view of the Council it should be 30 m.p.h.
I do not know whether my hon. Friend the Joint Parliamentary Secretary can go that far tonight or whether he will say, "We can impose a 40 m.p.h. limit on the derestricted part of the road". However, if he cannot go that far I urge him most seriously at least to remove the derestriction signs at this junction—in other words, at the point where one changes from a 40 m.p.h. limit to a derestricted road—to somewhere away from this junction. I believe that that fact, combined with the change down from derestricted to 40 miles an hour is part of the cause of some of the fatalities occurring at this spot. The case calls for urgent action.
I have put forward three suggestions. First, the Minister should seriously consider the imposition of speed limits along


the whole length of the by-pass. Second, there now appears to be no valid reason why the installation of traffic lights at the junction of Green Lane should be delayed for one minute longer. Indeed, I hope that as a result of this debate, my hon. Friend the Parliamentary Secretary will tomorrow send out the necessary instructions for that work to be done. Third, my hon. Friend should take steps to expedite the completion of the plans for either an underpass or a pedestrian footbridge at Carlisle Street and, having done that should ensure that the construction work is carried out with the minimum of delay.

9.36 p.m.

Mr. Harry Randall: My hon. Friend the Member for Gateshead, East (Mr. Conlan) is to be congratulated on referring to what I know to be a very serious and urgent problem. As I represent the neighbouring constituency of Gateshead, West, it is not unnatural that I should not only be very familiar with the question to which my hon. Friend has referred but that I should know the urgent need there is for the three steps he has asked to be taken as soon as possible.
I have here a cutting from the Gateshead Post of 10th December. My hon. Friend has clearly demonstrated the urgent need for some action to be taken on what is known as the Felling bypass, and in this week's Gateshead Post there is the banner headline
Gateshead Supports Bypass '30' Limit.
The cutting refers to a meeting of the Gateshead Borough Council, which had before it a communication from the Felling Urban District Council drawing attention to Felling's difficulties, and the Gateshead councillors' immediately supported the views expressed by that local authority.
I was interested to hear the suggestion of the Minister of Transport that to decrease the speed limit to 40 miles an hour and 30 miles an hour would not stop the speeding. That view was confirmed by the chief constable of Gateshead, who said that even prosecutions for speeding had not brought about the remedy that was required. The Press cutting also said that the Mayor of Gates-

head, alderman R.N. Baptist, had stated that
… the committee should support Felling's proposals, and also asked the M.P. for Gateshead West constituency to apply for an overpass or a subway on the Gateshead part of the bypass
That means that I am now giving prior notice to the Parliamentary Secretary that further correspondence and representations will follow, because it is not only in the Felling section of the bypass but equally on the Gateshead side that there is considerable concern about what is happening.
My hon. Friend the Member for Gateshead, East referred to the appalling increase in the accident rate. He spoke of three people who have been killed and the serious problem facing the residents in his area. I was delighted to learn that progress has been made as a result of my hon. Friend's energetic efforts. My hon. Friend said that the Minister had told him that alternative schemes were to be prepared. Whilst my hon. Friend accepted this and was delighted to have the news, he said that he recognised that it would take time to put into effect the remedies suggested by the Ministry. He said that, whatever scheme was inroduced, there would have to be all the preparations, all the thought, and all the discussions with the divisional road engineer.
I sometimes wonder how many schemes which have been put by the Minister to the divisional road engineer that we have up there in that part of the country have been rejected by him. I have from time to time put a number of cases to my hon. Friend the Joint Parliamentary Secretary. I have been disturbed because of the decisions so often taken by the divisional road engineer. For example, I asked for a pedestrian crossing in Lobley Hill Road where there is a school, a shopping centre, a clinic and a library. Old people have to draw their pensions. Mums have to push their prams across the road. Children go to and from school. I asked if a pedestrian crossing could be provided in this area of Gateshead.
This proposition went before the divisional road engineer. As a result of the representations made, I was very surprised to receive a letter from the


Parliamentary Secretary dated 9th September saying this:
Experience has shown that where the crossings are lightly used drivers tend to show little respect for them, and in these circumstances the crossings become a hazard rather than a help to pedestrians.
I do not understand that language. If a pedestrian crossing is provided, enforcement by law should bring about an improvement in the situation.

Mr. Conlan: May I help my hon. Friend? The reason for this logic is that the provision of a pedestrian crossing would create a false sense of security in pedestrians. The approach from the east to this crossing is somewhat blind because of a bend. Cars coming down this stretch of road at 60 or 70 miles an hour career round the bend at that speed because it is derestricted at this part. Pedestrians on the crossing would have a false sense of security. The accident rate could well be increased rather than diminished.

Mr. Randall: I am much obliged to my hon. Friend for helping the Joint Parliamentary Secretary out. This is in my constituency. I was going on to argue that if pedestrian crossings are a hazard we had better get rid of them. I am using this example in my argument about the divisional road engineer. I should like my hon. Friend the Joint Parliamentary Secretary to consider this. This is not a lighthearted criticism. I assure my hon. Friend that I am serious. I have contemplated tabling a Question asking on how many occasions representations made by the local authority at Gateshead have been turned down on the advice of the divisional road engineer. I am very much concerned about this. I hope, therefore, that an opportunity will be taken to look at it.
My hon. Friend said that it will take time to get sanctions. It would take time also for the building of a structure, whether it be a footbridge or an underpass. In the meantime, says my hon. Friend, the road is still perilous to cross and he put forward the three proposals which I hope the Parliamentary Secretary will consider. My hon. Friend referred to the need to complete at the shortest possible time whatever is believed to be the remedy. He also made a suggestion concerning traffic lights at Green Lane. The Parliamentary Secretary might look

into this and the question of the variable speed limits along the Felling by-pass of 30 m.p.h. and 40 m.p.h. and then a de-restricted road. This must be confusing to drivers, and I am sure that if some standard could be laid down it would assist pedestrians. I am glad that my hon. Friend has had the opportunity of raising this matter. I know how much his constituents will appreciate his having ventilated it here and I hope that before long further progress can be reported.

9.49 p.m.

Mr. J. B. Symonds: Hon. Members opposite are smiling, thinking no doubt that I shall occupy the next three-quarters of an hour. I put them readily at ease. I do not intend to do that. I express my sympathy with and support for my hon. Friends the Members for Gateshead, East (Mr. Conlan) and Gateshead, West (Mr. Randall).
I use the road which is the subject of this debate fairly regularly and I know the hardships and difficulties there. I was a member of Durham County Council when the road was completed. Even then the provisions now demanded by my hon. Friends were being asked for, but, unfortunately, those requests were not conceded.
As I have said, I travel this road fairly regularly. As recently as last Friday night on the way from Newcastle I noted the large volume of traffic which congregates at the Heworth churchyard roundabout. The traffic is particularly heavy in the early morning and at midday. There is a school nearby and I would draw the attention of the. Parliamentary Secretary to the dangers which school children encounter from the traffic there. I want my hon. Friend the Parliamentary Secretary to travel along there in his own car or in an official car between, say, a quarter past eight and half past nine in the morning. He will then understand the problems and dangers which people have to encounter. I have encountered them myself, particularly when wanting to catch the 9 o'clock train in order to get to the House of Commons on time. The Felling Council, of course, has had to put up with them for a very long time.
The traffic is going to Washington, South Shields, Jarrow, Sunderland and all such places in the area, and this adds


to the congestion and danger. The danger to pedestrians is such that on two sections of the road there should be a 30 m.p.h. limit. The different speed limits, 30 m.p.h., 40 m.p.h. and then unrestricted, create a dangerous situation because the ordinary motorist does not always realise what section he is in.
There is a good deal of heavy industry on the north side of the road, and conditions round about 5 o'clock in the evening have to be seen to be believed. There is an enormous volume of traffic, cars, buses, pedestrians and every sort of thing. There are long queues at the bus stops which people have to pass round, and drivers of vehicles have to slow down on innumerable occasions in the interests of everyone concerned.
Knowing what the dangers are, one could sometimes wish to stop all traffic on this road. I do not say that, of course, but let us have something done for the safety not only of pedestrians in my hon. Friend's constituency but of the travelling public generally in the area. People pass through going to South Shields, Sunderland and the other places I have mentioned, and they go down to Houghton-le-Spring on the 39 and 40 buses. I can go so far as to give the bus numbers because I have travelled that way a good number of times.
My hon. Friend the Member for Gateshead, East urged the adoption of three safety measures. First, I emphasise the importance of speed limits. There should be a speed limit of 30 m.p.h. on every section of the road. It may sound like putting it the wrong way round, but, in fact, having a speed limit would speed up the traffic. Furthermore, there would not be the congestion at the Tyne bridge as we know it now.
My hon. Friend spoke next about the traffic signals. For my part, I plead for an underpass. This could be of great value. Further down the road, beyond White Mare Pool, in my home town there is an underpass. Pedestrians can cross the road in comfort and safety knowing that they have a free passage without interference from road traffic.
I appeal to my hon. Friend the Joint Parliamentary Secretary to come to the area and see for himself. He will find a reception favourable to him and he

will see the difficulties that the pedestrians have in getting across this road. If his heart is not touched to do something then, I feel that it will be touched when he sees the danger that children have to contend with, particularly when going to school and returning home. If he comes to see for himself he will earn the undying gratitude of the people in the area.

9.55 p.m.

The Joint Parliamentary Secretary to the Ministry of Transport (Mr. Stephen Swingler): I begin by thanking my hon. Friend the Member for Gateshead, East (Mr. Conlan) on two counts. The first is that he gave me such detailed notice of the points he wished to raise. Indeed, he and his constituents have been giving notice of these points for some time—almost since the bypass was opened. We therefore have a considerable file about it. Secondly, my hon. Friend dealt clearly and in some detail with the background, history and basic reasons for bringing this matter before the House.
That means that I can be reasonably brief in my reply, which may raise hopes in some breasts and dash them in others. However, as I say, I can be reasonably brief and sometimes that means that a Minister is making a relatively agreeable reply to hon. Members. I hope that in some ways my reply tonight will be agreeable to my hon. Friend and to other hon. Members in spite of the fact that inevitably the debate has a very disagreeable and uncongenial background.
Perhaps I can say this to my hon. Friend the Member for Gateshead, West (Mr. Randall). What I said to him in the letter about pedestrian crossings was of course based on a long history of analysis of the policy on pedestrian crossings over three decades, roughly speaking, during which there was a time when local authorities put down as many pedestrian crossings as they pleased, with the result that such crossings in the late 1940s rose in number to a very high figure and it was claimed, at any rate, that respect for them diminished accordingly to a very low level.
That was followed by a period in which there was a drastic reduction in the number of pedestrian crossings precisely in order to raise respect for them. An attempt has been made to develop sophisticated criteria for the putting down of


pedestrian crossings based upon this experience over a long period. It has been based partly on the assessment of need and partly on what is inevitably the psychological question of how we develop and maintain the respect of drivers for pedestrian crossings, for otherwise we frustrate their purpose.
Precisely because at the moment we are not rigid or dogmatic about this, we are carrying out in two towns an experiment of multiplying the numbers of pedestrian crossings quite deliberately in order to test the results in terms of road safety and respect and to compare them with the experience in other towns. We hope to be able to satisfy my hon. Friends and the local authorities and the people they represent in that they may be able in future to be more confident in the judgments we make as to whether or not a particular claim for a crossing is justified.

Mr. Geoffrey Rhodes: I do not want to detain the House more than a moment because I believe that hon. Members opposite wish to raise a certain matter. But I would ask my hon. Friend how far the criteria have been made clear to the local authorities concerned, because it is my experience in Newcastle that, even where the local authority, after police investigation, feel that there is a strong case for a crossing, it has been deterred by previous policy from putting in an application and that it has been further strengthened in its fears because of the long delays due to pigeon-holing.

It being Ten o'clock, the Motion for the adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Howie.]

Mr. Swingler: I think that local authorities know the criteria fairly well. They know that they are based on certain arithmetical counts of the numbers of vehicles and pedestrians at particular points, as well as other factors. If there is any reason to suppose that they do not, I will certainly investigate it, but over a period of years these criteria have been discussed with the local authority associations—not necessarily agreed, but discussed and developed.
The point I want to make in reply to my hon. Friend the Member for Gateshead, West is that we are not dogmatic about it. We are prepared to test and are testing these criteria and are doing so quite deliberately in a couple of towns by saying that we will grant more pedestrian crossings to see what happens and to compare the results with those of other towns where the criteria are being more stringently applied.

Mr. T. W. Urwin: My hon. Friend speaks of the dangers of being dogmatically rigid, briefly remind him of a specific instance of this rigid dogma, as it is regarded by the public. I refer to the A690 and the question of placing a pedestrian crossing in a heavily built-up area where the speed limit has recently been raised to 40 m.p.h. A crossing in this area has been refused and yet about a quarter of a mile up the road, on a dual carriageway entering the Borough of Sunderland, the limit is 30 m.p.h. Public opinion is that the Ministry has applied rigid dogma.

Mr. Swingler: think that I had better reply to my hon. Friend the Member for Houghton-le-Spring (Mr. Urwin) about that separately. He is probably among the majority of hon. Members who have in mind particular cases, not all of which always carry in my head, but which very often require careful investigation. In the cool light of the morning I will certainly examine what my hon. Friend has said and I will make a considered reply to him.
I must now rapidly come to the important issues raised by my hon. Friend the Member for Gateshead, East. As I said, there is an uncongenial and disagreeable background to the debate. There have been four fatal accidents—some hon. Members said that there were three, but, unfortunately, there have been four—on the Felling bypass and they are a terribly tragic story, especially tragic as two of them happened to school children at a time when a crossing patrol was on duty. I know only too well that it is very easy for people to assume that it needs accidents and fatal casualties to stir the Ministry of Transport into action about pedestrian crossings. We have been profoundly shocked by these tragedies on the Felling bypass, and they have certainly given us a in


our examination of how to help pedestrians in my hon. Friend's constituency.
But, in fairness to ourselves, I should point out that we had made new proposals, as my hon. Friend knows, before these recent unfortunate accidents occurred. That was because of the actual increase in pedestrian and traffic volumes on the Felling bypass and the increases to be expected in the next few years. I think that my hon. Friend knows, because he mentioned some of them, the actions which we are taking, but I would like swiftly to put them on the record and to answer some of the points which have been raised. In June of this year, as a result of persistent representations, especially by my hon. Friend, we made the following proposals: to realign the staggered crossroads formed by the bypass, Green Lane and Hepburn Gardens and instal traffic signals; to seal the central reservation at Carlisle Street to eliminate right turns, which have been causing traffic congestion, and to construct a link road between Brewery Lane and Green Lane. These were proposals which were put forward in June. We consider that the traffic signals will obviously assist pedestrians at Green Lane and create gaps in the traffic to help those at Carlisle Road, who will also be helped by the elimination of the right turns.
Since these proposals were made in June, I very much regret to say that the four fatal accidents have occurred on the bypass. My hon. Friend quite properly represented to us that the proposals we made were inadequate, and that more needed to be done. Therefore, since that time my right hon. Friend the Minister has asked the agent authority, the Felling Urban District Council, as a matter of extreme urgency in view of the increase in the accident rate, to prepare alternative schemes for a footbridge or subway at Carlisle Street. As my hon. Friend implied, some time is bound to pass while these schemes are prepared; engineering work has to be done and either scheme will probably require an elaborate system of ramps and unclimbable guard rails along the eight approach kerbs to the junction.
There may be objections from nearby houses fronting any bridge or ramp structures. In the case of a subway some

acquisition of land from front gardens of adjacent houses may be necessary. We do not know about these things, but they are being gone into by the agent authority. It may be necessary to remove a bus draw-in west of the Carlisle Street junction. Nevertheless, we are pushing ahead to see whether something more immediate can be done. We are now exploring the possibility of erecting a prefabricated steel footbridge at this site as a temporary measure. Felling Urban District Council is examining the idea to see whether it is practicable and offers a worthwhile saving of time.
These are the immediate measures which we are considering on the Felling bypass. With regard to the other measures I have mentioned, the scheme for the installation of traffic signals at Green Lane is now being considered in the Felling U.D.C.'s surveyor's department. Even here the work involved in realigning the side roads, which are classified roads and, therefore, are the responsibility of the council, will take some time. The relief road between Brewery Lane and Green Lane, which will also be a non-trunk road, is at present being built, and if the weather is reasonable it should be finished in a few months' time. I can assure my hon. Friend that everyone, both at the Ministry and the council offices, is well aware of the extreme urgency of these schemes. Although we regard these schemes, the installation of the traffic signals and the link road, as essential, they are not, as I said, dependent one upon the other. We aim to get ahead with both of them as rapidly as possible, though of course there are, as usual, difficulties in connection with them.
Some of my hon. Friends have raised the question of speed limits. The part of the bypass with which we are dealing has a 40 miles per hour speed limit on it, although there is a considerable section with a 30 miles per hour speed limit. That 40 miles per hour speed limit ceases at present just to the east of the Carlisle Street junction. The U.D.C. has told us that westbound traffic would see the speed limit signs much better and slow down in time for the junction if the limit were extended about 250 yards eastwards. This is a very recent proposal and we are looking at it very urgently. I cannot answer my hon. Friend on this point now, but I can assure him that we


are treating it as a matter of urgency. But in the next few days we are going to put up some of the new style "children" signs on the bypass on both sides of Carlisle Street.

Mr. Symonds: Would my hon. Friend consider restricting that section to 30 miles an hour all the way along instead of 40?

Mr. Swingler: We have this proposal put forward by the council, and we feel obliged to consider its representations about the speed limit. We shall be prepared to consider any other safety measures which it puts forward, but let us first consider the present proposal in relation to the other measures which we are taking.
On the eastern approach to Carlisle Street, where the traffic has just come into the speed limit, these new "children" signs which we shall put up will be four feet high, the largest size permissible at the moment. On the other side of the junction they will be 30 inches high. I understand that the council has asked the chief constable whether he can provide some police protection for the children rather than a normal crossing patrol at the Carlisle Street crossing point.
None of these proposals will, unfortunately, undo the tragic results of the recent accidents, but I hope that what I say will show that we recognise the need for drastic improvement in the interests of pedestrians. We shall take the urgently necessary measures as quickly as they are physically possible and can be arranged administratively.
I conclude by congratulating my hon. Friend the Member for Gateshead, East on his persistence in representations on behalf of his constituents who have undoubtedly suffered over many years since the opening of the Felling bypass. We trust that we shall be able to initiate a much better record of safety on this bypass in the near future.

SCOTLAND (HIGHLAND DEVELOPMENT)

10.12 p.m.

Mr. George Y. Mackie: I am very grateful for the chance to take up the question of current developments in the Highlands. I am also grateful to the Minister of State for being here, and I hope that he will be able to relieve some of our fears. In addition, I wish to thank the hon. Member for Whitehaven (Mr. Symonds), who had the last Adjournment debate, and who cut short an important chance to deal with a tragic issue in his constituency.
The whole of Scotland, and especially the Highlands, is extremely perturbed about developments in projects which could assist the Highlands. For many years the main hope of people who live in the Highlands has been the hydroelectric schemes initiated by Mr. Tom Johnston which have brought immense comfort and hope to the Highlands. We have just had the cancellation of two of his schemes which have long been under discussion for reasons which do not appear to us to be valid. There is a great doubt in Scotland concerning the expressed promises of the Labour Party that the new prototype fast-breeder reactor would go to Dounreay in the interests of development and of technical progress considering the build-up of know-how in the atomic energy establishment there. Now we have rumours, which, we fear, may be well founded and which, indeed, have been expressed by responsible scientific correspondents in national newspapers, that a decision has been made to put it elsewhere.
I should like the Minister of State to assure us that this is not so. Nothing is more essential to Highland development than that the people of Scotland shall have confidence in the new Highland Development Board. It is absolutely scandalous that this newly appointed board should be faced with two hammer blows to the confidence of the Highlands within a month—and I sincerely hope that it is only one hammer blow. For 150 years the people of the Highlands have steadily lost hope of progress in their native land. They have steadily looked more and more to the South as the only place where they can prosper


—to overseas, to Canada, Australia and all the places where they have gone.
We had hoped that this Highland Development Board, which has been Liberal policy for over 40 years—[Laughter.] I assure hon. Members that it is nothing to laugh about. This is an extraordinarily serious subject. I hope that the Minister of State will be able to assure us that we will not have a continuing succession of long-term plans while projects which could immediately help the Highlands are cancelled, perhaps in the interest of economy or by the Treasury in London.
I should like to draw the Minister's attention to the leader in the Scotsman today. It is highly important that he should scotch the rumour of this story right away. The Scotsman draws attention to the seriousness of Dounreay's claim and to the fact that if the project is not sited there,
Mr. Ross will have difficulty in honourably remaining a member of the Cabinet after his insistence while out of office that Dounreay should be selected.
This leader in the national newspaper of Scotland shows the fears of the people of Scotland. I hope that the Minister of State will be able to scotch these fears and that he and his colleagues will be able, with honour, to remain in office.

10.17 p.m.

Mr. Russell Johnston: I wish quickly to draw to the attention of the Minister of State a number of points concerning the two hydro-electric schemes which my hon. Friend the Member for Caithness and Sutherland (Mr. George Y. Mackie) has mentioned and about which there is considerable bitterness in the north of Scotland. I start by drawing the Minister's attention to a quotation from the last occasion when there was an Adjournment debate on this subject. It was initiated by the hon. Member for Glasgow, Craigton (Mr. Millan), who is now Under-Secretary of State for Defence for the Royal Air Force, and it was a debate to which the present Secretary of State for Scotland contributed.
Speaking of the North of Scotland Hydro Electric Board, the Secretary of State said:
This has been the one institution in the Highlands which has worked, a nationalised industry which has become respected as no other institution in the Highlands has, and

which is being killed and deliberately killed by the Government. Why?"—[OFFICIAL REPORT, 6th February, 1964; Vol. 688, c. 1494.]
That is exactly the question which we now ask, because not merely is it a fact that hydro-electricity appears to have been killed, but the reason for having done it has been substantiated by the Government's Ministers for the same reasons as they rejected when they were in Opposition.
We in the Liberal Party stood shoulder to shoulder with the present Secretary of State and the Minister of State against the Conservative Government on this issue, and w are very sorry indeed to see such a volte face.

Mr. Jeremy Thorpe: They are all Tories now.

Mr. Johnston: First, there is the question of the decision by the public inquiry conducted by Campbell and Dick. With the support of the present Secretary of State for Scotland, the hon. Member for Craigton rejected the fact that such a complicated question as deciding what was the superior form of electrical generation could be settled by a public inquiry.
One asks why hydro-electric development should always be singled out for that sort of inquiry. We know, and the Minister himself knows, what reason he would give if he were now in Opposition and faced with a similar situation. He would say that it was because of the landowners, because of the fishing rights and because of the pressure of Aims of Industry. One is appalled to find that the same argument can again be used.
The argument was based upon the famous 8 per cent. criterion. The conclusion of the report of the public inquiry on Fada/Fionn stated:
Our assessment … is on a basis of net return of the order of 8 per cent. of its depreciated value over its life time.
What did the hon. Member for Craigton say about the memorandum that was introduced by the Secretary of State in a Conservative Administration? He said:
This whole memorandum was accurately described by Mr. Michael Grieve in two excellent articles in the Daily Express, and I pay every tribute to them, as 'the 8 per cent. plot'. That is a very accurate way of describing it. It is a plot against the Hydro-electric Board."—[OFFICIAL REPORT, 6th February, 1964; Vol. 688, c. 1492.]


That is the argument which was being used by the supporters of Her Majesty's present Administration.
Further, the question of inflation and the fact that hydro-electricity is non-inflationary is ignored in the report of Campbell and Dick.
In Galloway at the present time, the cost of electricity is ·148 pence as against ·882 pence in the thermal coal-fired stations and 1·91 pence in the nuclear stations. Admittedly the initial capital cost is high. That is always admitted. We have not cavilled about that, and neither has the Minister and his supporters.
I regret very much that this decision has been made by a Labour Government. After the present project at Cruachan is finished, the construction teams will be broken up. I hope very much that the Minister will be able, even in this short time, to give some justification for what is regarded as a shocking decision in the north of Scotland.

10.22 p.m.

Mr. Norman Buchan: I am very pleased at this late conversion of the Liberal Party to nationalisation. We are delighted to see it.

Mr. Archie Manuel: Not steel.

Mr. Buchan: Not steel, no, but in other respects they have made a great advance, because they realise that in such an area we need publicly-owned industry in order to be successful.
I would like the Minister to reply on these points about the power stations, but I would ask him to weigh very carefully the 8 per cent. Was it that, or Aims of Industry? I hope that we can refute the suggestion that Aims of Industry and Colonel Whitbread lay behind the decision.
We are told that the Conservative Party, which had power for so many years, did nothing about the Highland Board. The Liberals would have introduced the Highland Board, but, unfortunately, they did not have power. We had the power and the desire, and we have created it.
One of the tasks in front of it is to break the grip of the landowners on the

Highlands. Something to which I would like to see the Minister pay attention is the sale of large estates up there, and I hope that the Liberals will support us on it. [Interruption.] If anyone has broken commitments about the timing of this, it is not me.
The hon. Member for Inverness (Mr. Russell Johnston) has asked his county council that salmon, like trout, should be taken under the aegis of the Highland Board and the fishery rights nationalised. I hope that the Liberal Party will take one more step towards the acceptance of socialisation like that one.
Like the collapse of the statue of Stalin in Budapest in 1956, perhaps the fall of the salmon in the Highlands might mark a new and fundamental step towards a Socialist as well as a Liberal era.

Mr. Deputy Speaker: Mr. Willis.

Mr. Hector Monro: On a point of order. We are discussing a matter of particular interest to my constituents. May I not have an opportunity to intervene?

Mr. Deputy Speaker: Order. If the hon. Gentleman catches my eye after the Minister has spoken, he will be able to take part in the debate.

10.24 p.m.

The Minister of State, Scottish Office (Mr. George Willis): We have not had much time to discuss this particular issue, and, as the hon. Gentleman the Member for Caithness and Sutherland (Mr. George Y. Mackie) knows, I did not get notice of it until a short time ago.

Mr. George Y. Mackie: Too long.

Mr. Willis: The hon. Gentleman says "Too long", but it was a short time ago, and it left us not very long in order to get some material. In any case, the hon. Gentleman did not tell me exactly what it was he intended to raise about the Highlands. He said "Highland development", and that is a pretty comprehensive term.
However, I assume from what has been said that the general concern of hon. Members who have spoken is with the decision concerning the Hydro-Electric Board and the decision concerning the prototype fast-breeder reactor. No


decision has yet been made about the latter, and I am sure that in those circumstances the hon. Gentleman would not expect me to say any more at the moment.

Mr. Ian MacArthur: Mr. Ian MacArthur (Perth and East Perthshire) rose—

Mr. Willis: I have been left only seven minutes in which to try to reply to the points made by three hon. Members. I am very sorry that I cannot give way to the hon. Gentleman.

Mr. MacArthur: Will the Minister give way for just five seconds?

Mr. Willis: Very well.

Mr. MacArthur: I appreciate that the Minister now has only five minutes in which to reply, but that surely should be time enough for him to eat his words and those of his right hon. and hon. Friends about the Hydro-Electric Board.

Mr. Willis: Of all the quotations that have been made about the Hydro-Electric Board, I have not heard one from a speech by the hon. Member for Edinburgh East, so I have no words to eat. The hon. Gentleman can read my speeches at his leisure. [Interruption.] I do not know whether hon. Gentlemen opposite want me to answer or not, but I assume that those who have raised this Adjournment debate, and who by the way have shown far more initiative than have the Official Opposition about this matter—they appear to be asleep here as on other issues—certainly want some reply.
This is a very complicated Report, and, so far as the economics of the two schemes are concerned, it comes out quite definitely against both of them. I think tat the hon. Gentleman ignored what is probably an equally important if not more important consideration, and that is that, as my right hon. Friend the Secretary of State pointed out in his statement, the first consideration is that we shall have enough electric power in Scotland to meet our needs as a result of the programmes of the South Board until 1975. Whether we like it or not, the South Board has to proceed with a certain programme. That programme

involves the building of large stations, and, as I understand it—though I confess that I am an amateur in these matters—this programme involves the building of very large stations. In fact, each station is larger than the one before. This is the interesting feature—

Mr. George Y. Mackie: Why did the Chairman of the South Electricity Board, Mr. Elliott, come out in favour of putting the fast prototype reactor at Dounreay which is all set to produce about 250 megawatts?

Mr. Willis: The hon. Gentleman should listen to the argument. The South Board has to build these power stations. If, as a result of doing something which is necessary in the interests of Scotland, we find ourselves in the position of having ample electric power until 1975, should we then use our resources to proceed with schemes which will not be needed? This is the question which the hon. Gentleman has not answered.

Mr. Mackie: We could export.

Mr. Willis: The hon. Gentleman says that we could export. I am not saying that it is not important in the context of the Highlands, but the amounts are small in comparison with the needs of modern industry to the South. The hon. Gentleman said that this had been done for reasons which were not quite valid. The reasons which I have mentioned are valid and powerful ones. If we have resources available to utilise in the Highlands, we are better advised to use them for something that will produce immediate results, and the hon. Gentleman knows this.

Mr. Mackie: Announce some.

Mr. Willis: We are proceeding with them. We set up the Highland Development Board within a year of taking office. Two weeks ago the Board announced its scheme for special assistance to industry over and above any assistance applying in any other part of the country. I assure the hon. Gentleman that the first grant under that scheme has already been made. This was done within six weeks of the Board being established.

Mr. Mackie: From the Treasury loan scheme.

Mr. Willis: The hon. Gentleman ought to be fair. This is much better than the Treasury loan scheme under the Highland Fund Scheme.

The Question having been proposed at Ten o'clock and the debate having continued

for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half-past Ten o'clock.